As per AS-14, the type of Amalgamation are

The correct answer is - Nature of merger and nature of purchase

Key Points

• Nature of merger and nature of purchase
  • AS-14, issued by the Institute of Chartered Accountants of India (ICAI), deals with accounting for amalgamations.
  • It categorizes amalgamations into two types: nature of merger and nature of purchase.
  • In the nature of merger, the amalgamation is considered a unification of interests, and the pooling of interests method is used.
  • In the nature of purchase, the amalgamation is considered an acquisition, and the purchase method is used.

Additional Information

• Pooling of Interests Method
  • Used when the amalgamation is in the nature of a merger.
  • All the assets, liabilities, and reserves of the transferor company are recorded at their existing carrying amounts.
  • No adjustments to the book values are made except to ensure uniform accounting policies.
• Purchase Method
  • Used when the amalgamation is in the nature of a purchase.
  • The assets and liabilities of the transferor company are recorded at their fair values.
  • Goodwill or capital reserve arises based on the difference between the purchase consideration and the fair value of net assets acquired.
• Amalgamation Adjustments
  • Involves aligning the accounting policies of the amalgamating companies.
  • Any differences in accounting policies should be adjusted to reflect a uniform policy.