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    Accounting-For-Amalgamation-Absorption-And-External-Corporate-Accounting (Set 1)

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    Ajeeth S

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    Accounting-For-Amalgamation-Absorption-And-External-Corporate-Accounting (Set 1)

    Uploaded by

    Ajeeth S
    8 views8 pages

    Original Title

    accounting-for-amalgamation-absorption-and-external-corporate-accounting [set 1]

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    8 views8 pages

    Accounting-For-Amalgamation-Absorption-And-External-Corporate-Accounting (Set 1)

    Uploaded by

    Ajeeth S

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 8

    Accounting for Amalgamation, Absorption

    and External
    chapter in
    Corporate Accounting

    1 of 8 sets

    Chapter: Accounting for Amalgamation, Absorption and External

    1. Shares received from the new company are recorded at –


    A. Face value
    B. Average price
    C. Market value
    o m
    D. None of the above
    . c
    Answer:C
    te
    a
    q M
    2. When two or more companies carrying on similar business decide to combine, a
    c
    new company is formed, it is known as ..................
    A. Amalgamation
    B. Absorption
    M
    C. Internal reconstruction
    D. External reconstruction
    Answer:A

    3. When one of the existing companies take over business of another company or
    companies, it is known as ...........
    A. Amalgamation
    B. Absorption
    C. Internal reconstruction
    D. External reconstruction
    Answer:B

    4. While calculating purchase price, the following values of assets are considered
    A. Book value
    B. New values fixed
    C. Average values
    D. Market values
    Answer:B

    5. While calculating purchase price, the following values of assets are considered
    A. Book value
    B. New values fixed
    C. Average values
    D. Market values
    Answer:C

    6. Which of the following statement is correct?


    A. The amount of Goodwill or Capital Reserve is found out in the books of purchasing company
    only
    B. The amount of Goodwill or Capital Reserve is found out in the books of vendor company only.
    C. Goodwill = Net Assets – Purchase price
    D. The face value of shares of purchasing company will be taken in to account while calculating
    purchase consideration.
    Answer:A

    7. If the two companies have different accounting policies in respect of the same
    item, then they make necessary changes to adopt .............. accounting policies.
    A. LIFO method
    B. FIFO method
    C. Weighted method
    D. Uniform
    Answer:D

    8. The Amalgamation Adjustment Account appears in the books, it is shown under


    the heading of ......... in the balance sheet.
    A. Reserve and Surplus
    B. Fixed Assets
    C. Investments
    D. Miscellaneous expenditure

    View all MCQ's at McqMate.com


    Answer:D

    9. If amalgamation is in the ..............., the General Reserve or Profit and Loss A/c
    balance will not be shown in the balance sheet.
    A. Form of Merger
    B. Form of purchase
    C. Net assets method
    D. Consideration method
    Answer:B

    10. If the intrinsic values of shares exchanged are not equal, the difference is paid
    in ...........
    A. Cash
    B. Debenture
    C. Pref. share
    D. Assets
    Answer:A

    11. In case of .............., one existing company takes over the business of another
    company and no new company is formed.
    A. Amalgamation
    B. Absorption
    C. Reconstruction
    D. None of the Above
    Answer:B

    12. In amalgamation of two companies


    A. Both companies lose their existence
    B. Both companies continue
    C. Any one company continues
    D. none
    Answer:A

    13. When purchasing company pays purchase consideration, it will be debited to


    A. Business purchase account
    B. Assets account

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    C. Liquidator of selling company’s account
    D. none
    Answer:C

    14. When the purchasing company bears the liquidation expenses, it will debit the
    expenses to
    A. Vendor Company’s Account
    B. Bank Account
    C. Goodwill Account
    D. none
    Answer:C

    15. When the Vendor (seller) company agrees to bear liquidation expenses, it will
    debit
    A. Realisation Account
    B. Bank Account
    C. Goodwill Account
    D. none
    Answer:A

    16. When the purchasing company does not take over a particular liability and the
    vendor company pays that liability, it will debit it to
    A. Realisation Account
    B. Bank Account
    C. Liability Account
    D. none
    Answer:A

    17. When the Net Assets are less than the Purchase Consideration, the difference
    will be
    A. Debited to Goodwill A/c.
    B. Debited to General Reserve
    C. none of these
    D. none
    Answer:A

    View all MCQ's at McqMate.com


    18. While calculating purchase consideration ............... values of assets is to be
    considered.
    A. Book value
    B. Revalued price
    C. Average price
    D. Capital
    Answer:B

    19. Net Assets minus Capital Reserve is _________


    A. Goodwill
    B. Total assets
    C. Purchase consideration
    D. None of these
    Answer:C

    20. Hitesh Ltd.’s purchase consideration is Rs.12,345 and Net Assets Rs.3,568,
    then..........
    A. Goodwill Rs. 8,777
    B. Capital Reserve Rs. 8,777
    C. Goodwill Rs. 15,913
    D. Capital Reserve Rs. 15,913
    Answer:A

    21. The original amount of preference share capital should be transferred to


    ............ account in the time of amalgamation in the books of vendor co.
    A. Preference shareholders Account
    B. Capital Reserve Account
    C. Equity share capital Account
    D. Equity share capital Account
    Answer:A

    22. The share capital, to the extent already held by the purchasing company, is
    closed by the vendor company by crediting it to:
    A. Share capital account
    B. Purchasing company's account
    C. Realisation account.

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    D. none
    Answer:C

    23. In case of inter-company holdings, the purchasing company, at the time of


    payment of the purchase consideration, surrenders the shares in the vendor
    company by crediting:
    A. Vendor company's account
    B. Shares in the vendor company account
    C. Share capital account.
    D. none
    Answer:B

    24. The vendor company transfers preliminary expenses (at the time of absorption)
    to:
    A. Equity shareholders' account
    B. Realisation account
    C. Purchasing company's account.
    D. none
    Answer:B

    25. A Ltd. and B Ltd. go into liquidation and a new company X Ltd. is formed. It is
    a case of:
    A. Absorption
    B. External reconstruction
    C. Amalgamation.
    D. none
    Answer:C

    26. For amalgamation in the nature of merger, the shareholders holding at least
    ______ or more of the equity shares of the transferor company becomes the equity
    shareholders of the transferee company.
    A. 51%
    B. 90%
    C. 99%
    D. 100%
    Answer:B

    View all MCQ's at McqMate.com


    27. As per AS–14 purchase consideration is what is payable to
    A. Shareholders
    B. Creditors
    C. Debenture holders
    D. Shareholders and Debenture holders.
    Answer:A

    28. In the case of ………………………. only one of the combining companies


    survives and the other losses its separate identity.
    A. Acquisition
    B. Merger
    C. Amalgamation
    D. Formation
    Answer:A

    29. ……………….is the amount payable by the purchasing companies to the


    vendor company for taking over the business of vendor company.
    A. Goodwill
    B. Total assets
    C. Purchase consideration
    D. None of these
    Answer:C

    30. In absorption there is one ……………………and no formation.


    A. Merger
    B. Liquidation.
    C. Demerger
    D. Formation
    Answer:B

    31. In external liquidations, there is one liquidation and one ………………


    A. Formation
    B. Merger
    C. Demerger
    D. Purchase consideration

    View all MCQ's at McqMate.com


    Answer:A

    32. When two or more companies carrying on similar business decide to combine, a
    new company is formed, it is known as ..................
    A. Amalgamation
    B. Absorption
    C. Internal reconstruction
    D. External reconstruction
    Answer:A

    33. When one of the existing companies take over business of another company or
    companies, it is known as ...........
    A. Amalgamation
    B. Absorption
    C. Internal reconstruction
    D. External reconstruction
    Answer:B

    34. Which of the following statement is correct?


    A. The amount of Goodwill or Capital Reserve is found out in the books of purchasing company
    only
    B. The amount of Goodwill or Capital Reserve is found out in the books of vendor company only.
    C. Goodwill = Net Assets – Purchase price (
    D. The face value of shares of purchasing company will be taken in to account while calculating
    purchase consideration.
    Answer:A

    View all MCQ's at McqMate.com

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