Accounting · Corporate Accounting
Consider the following statements regarding the accounting treatment of an amalgamation in the 'nature of a purchase': Statement 1: Under the 'nature of a purchase' method, the identity of statutory reserves of the transferor company cannot be preserved in the books of the transferee company. Statement 2: If the purchase consideration exceeds the net agreed value of assets taken over, the excess amount is recognised as goodwill. Choose the correct option:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement 1 is false, but Statement 2 is true.✓
- 2Statement 1 is true, but Statement 2 is false.
- 3Both statements are false.
- 4Both statements are true.
Correct answer
Statement 1 is false, but Statement 2 is true.
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