MCQ’s on Amalgamation – Absorption and External Reconstruction AS-14 | (Free Resource)

11. When the merger involves liquidation of one existing sick company and formation of one new company, it is called
(a) internal reconstruction
(b) absorption
(c) external reconstruction
(d) amalgamation

12. A feature which is common in all cases of merger viz. absorption, amalgamation and external reconstruction is
(a) purchase of one company by another company
(b) liquidation of at least two companies
(c) formation of at least one new company
(d) liquidation at least one existing company and formation of at least one new company

13. Under the Companies Act, 1956,
(a) absorption’ includes ‘’amalgamation”
(b) amalgamation’ includes ‘absorption’
(c) amalgamation’ excludes ‘absorption’
(d) internal reconstruction’ includes ‘’external reconstruction”

14. Accounting for amalgamation is governed by
(a) Accounting Standard 1
(b) Accounting Standard 13
(c) Accounting Standard 14
(d) Accounting Standard 11

15. Accounting for absorption is governed by
(a) Accounting Standard 1
(b) Accounting Standard 13
(c) Accounting Standard 14
(d) Accounting Standard 11

16. Accounting for amalgamation by way of purchase is governed by
(a) Accounting Standard 1
(b) Accounting Standard 13
(c) Accounting Standard 14
(d) None of the above

17. Accounting for amalgamation by way of merger is governed by
(a) Accounting Standard 1
(b) Accounting Standard 13
(c) Accounting Standard 14
(d) None of the above

18. According to AS 14, Transferor Company means the Company
(a) which is amalgamated into another Company
(b) into which a Company is amalgamated
(c) which is newly formed
(d) none of the above

19. According to AS 14, Transferee Company means the Company
(a) which is amalgamated into another Company
(b) into which a Company is amalgamated
(c) which is liquidated
(d) none of the above

20. According to AS 14, Amalgamations fall into two categories
(a) amalgamation and absorption
(b) merger and purchase
(c) amalgamation and reconstruction
(d) external reconstruction and internal reconstruction

Answers: 11)external reconstruction 12)purchase of one company by another company 13)amalgamation’ includes ‘absorption’ 14)Accounting Standard 14 15)Accounting Standard 14 16)Accounting Standard 14 17)Accounting Standard 14 18)which is amalgamated into another Company 19)into which a Company is amalgamated 20)merger and purchase