AS 14 Amalgamation: Purchase Consideration Workings with Solved Questions for CA Inter

The notes work through several solved questions on amalgamation. Question 1 deals with a company absorbed by another where members receive one equity share for every five held, issued at a premium. Question 2 uses balance sheet extracts of two companies, where three equity shares of Rs 10 are allotted for every two shares held, and 12% debentures are converted into 13% debentures of the same amount. Later questions use a balance sheet with equity shares and preference shares to show how the purchase consideration is arrived at, with step-wise solutions for each part.

Attempt each question on your own first, using only the given figures, and then compare your working with the solution. Focus on the logic of the share exchange ratio, the treatment of the premium and the conversion of debentures, since these steps repeat across amalgamation questions. Keep a separate sheet of the formula used for purchase consideration so you can recall it quickly. Re-solve the balance sheet based question after a few days to check retention.

These notes are useful for CA Inter students who are studying AS 14 Amalgamation as part of the Advanced Accounting paper. They are also helpful for students who find purchase consideration calculations confusing and want more practice on share exchange problems. Students who have covered the theory and now need solved examples to apply it will get the most benefit from working through the questions.

• Purchase consideration under AS 14
• Share exchange ratio and issue at premium
• Conversion of debentures in amalgamation
• Amalgamation in the nature of merger
• Balance sheet extracts of transferor companies
• Preference and equity share capital in amalgamation