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3/8/25, 1:49 PM Types and Solutions for Unemployment



Amalgamation of Companies: Concepts
and Accounting Treatment as per AS-14
(ICAI)
1. Introduction to Amalgamation
Amalgamation refers to the merging of two or more companies into one, with the transfer of assets,
liabilities, and business operations. It is usually done to achieve business expansion, synergy, tax
benefits, and financial restructuring.
The accounting treatment for amalgamation in India is governed by Accounting Standard-14 (AS-14)
issued by ICAI. This standard provides guidelines on how amalgamation should be recorded in the
books of accounts.




2. Types of Amalgamation as per AS-14
1. Amalgamation in the Nature of Merger
Both companies combine to form a new entity with no significant adjustments in the financial
statements.
Conditions:

All assets and liabilities of the transferor company are taken over by the transferee company.
At least 90% of the shareholders of the transferor company become shareholders of the
transferee company.
The business continues without major modifications.
No adjustments are made to fair values.

Accounting Treatment: Pooling of Interest Method
Assets & Liabilities: Recorded at their existing book values.
Reserves of Transferor Company: Carried forward to the transferee company.
Difference (if any): Adjusted in the General Reserve.




2. Amalgamation in the Nature of Purchase
One company takes over another (like an acquisition), and the transferor company loses its
identity.
Conditions:
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