Accounting for Amalgamations: classification into merger or purchase determines accounting method and treatment of goodwill and reserves. Accounting for amalgamations requires classification as either an amalgamation in the nature of merger or in the nature of purchase, each carrying a prescribed method of accounting. Mergers meeting specified continuity and consideration criteria use the pooling of interests method, preserving carrying amounts of assets, liabilities and reserves and aggregating profit and loss balances. Purchases use the purchase method, allocating consideration to identifiable assets and liabilities at fair value, recognising excess as goodwill to be amortised (normally within five years) or a capital reserve if consideration is lower, and preserving statutory reserves where required by law.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Accounting for Amalgamations: classification into merger or purchase determines accounting method and treatment of goodwill and reserves.
Accounting for amalgamations requires classification as either an amalgamation in the nature of merger or in the nature of purchase, each carrying a prescribed method of accounting. Mergers meeting specified continuity and consideration criteria use the pooling of interests method, preserving carrying amounts of assets, liabilities and reserves and aggregating profit and loss balances. Purchases use the purchase method, allocating consideration to identifiable assets and liabilities at fair value, recognising excess as goodwill to be amortised (normally within five years) or a capital reserve if consideration is lower, and preserving statutory reserves where required by law.
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