Question 1

If the two companies have different accounting policies in respect of the same item, then they make necessary changes to adopt .............. accounting policies.

Accepted Answer

A)  lifo method
B)  fifo method
C)  weighted method
D)  uniform D

Question 2

If amalgamation is in the ..............., the General Reserve or Profit and Loss A/c balance will not be shown in the balance sheet

Accepted Answer

A)  form of merger
B)  form of purchase
C)  net assets method
D)  consideration method B

Question 3

The Amalgamation Adjustment Account appears in the books, it is shown under the heading of ......... in the balance sheet.

Accepted Answer

A)  reserve and surplus
B)  fixed assets
C)  investments
D)  miscellaneous expenditure D

Question 4

If the intrinsic values of shares exchanged are not equal, the difference is paid in ...........

Accepted Answer

A)  cash
B)  debenture
C)  pref. share
D)  assets

Question 5

While calculating purchase price, the following values of assets are considered

Accepted Answer

A)  book value
B)  new values fixed
C)  average values
D)  market values

Question 6

When two or more companies carrying on similar business decide to combine, a new company is formed, it is known as ..................

Accepted Answer

A)  amalgamation
B)  absorption
C)  Absorption.
D)  absorption..

Question 7

In case of .............., one existing company takes over the business of another company and no new company is formed

Accepted Answer

A)  amalgamation
B)  absorption
C)  reconstruction
D)  none of the above

Question 8

When one of the existing companies take over business of another company or companies, it is known as ...........

Accepted Answer

A)  amalgamation
B)  absorption
C)  internal reconstruction
D)  internal reconstruction.

Question 9

Shares received from the new company are recorded at -

Accepted Answer

A)  face value
B)  face value.
C)  market value
D)  face value..

Question 10

Which of the following statement is correct?

Accepted Answer

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.

Exam 1: Amalgamations and Takeovers in Business