Amalgamation - Introduction

Amalgamation a chapter of Financial Accounting.
This is just an introduction and types of an amalgamation.

1. ﷽ Advanced Accounting By Shoaib Ur Rehman On behalf of Primary Ustaad

2. Amalgamation Meaning of Amalgamation: The action, process or result of combining or uniting. Introduction: In simple words an amalgamation is a combination of two or more companies into a new entity.

3. Introduction An amalgamation is an event or transaction in which two or more companies, or their net assets, are brought under common control in a single legal entity.

4. Forms of Amalgamation Merger – (Amalgamation) In case of merger both the combining companies are dissolved and assets and liabilities of both companies are transferred to a newly created company. A Ltd. B Ltd. AB Ltd

5. Forms of Amalgamation Acquisition – (Absorption) A Ltd. B Ltd A Ltd.

6. Forms of Amalgamation External Reconstruction: X Ltd Y Ltd

7. Motive of Amalgamation First of all Amalgamation is based on synergy system. Synergy is a relationship in “2+2=5”, where the whole is greater than the sum of parts. E.g. There are two Companies Companies A Ltd B Ltd Price 10 11 Advertisement Exp. 5 L 7 L Operating Exp. 3 L 4 L Net Profit 4 L 5 L

8. Main Motives of Amalgamation Economies of Sale Financial Economies Growth Managerial Effectiveness Financial Strength Reduce Competition Market Leadership