Deck 1: Amalgamations and Takeovers in Business

Question 1

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)Absorption.
D)absorption..

Answer 1

amalgamation

Question 2

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)internal reconstruction.

Answer 2

absorption

Question 3

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 3

new values fixed

Question 4

Shares received from the new company are recorded at -

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

Question 5

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.

Question 6

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

Question 7

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

Question 8

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

Question 9

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

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

Question 10

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