Top 50+ Solved Accounting for Amalgamation, Absorption and External MCQ Questions Answer
Q. When the purchasing company does not take over a particular liability and thevendor company pays that liability, it will debit it to
a. Realisation Account
b. Bank Account
c. Liability Account
d. none
Q. When the Net Assets are less than the Purchase Consideration, the difference willbe
a. Debited to Goodwill A/c.
b. Debited to General Reserve
c. none of these
d. none
Q. While calculating purchase consideration ............... values of assets is to beconsidered.
a. Book value
b. Revalued price
c. Average price
d. Capital
Q. Net Assets minus Capital Reserve is _________
a. Goodwill
b. Total assets
c. Purchase consideration
d. None of these
Q. Hitesh Ltd.’s purchase consideration is Rs.12,345 and Net Assets Rs.3,568,then..........
a. Goodwill Rs. 8,777
b. Capital Reserve Rs. 8,777
c. Goodwill Rs. 15,913
d. Capital Reserve Rs. 15,913
Q. The original amount of preference share capital should be transferred to ............account in the time of amalgamation in the books of vendor co.
a. Preference shareholders Account
b. Capital Reserve Account
c. Equity share capital Account
d. Equity share capital Account
Q. The share capital, to the extent already held by the purchasing company, is closedby the vendor company by crediting it to:
a. Share capital account
b. Purchasing company's account
c. Realisation account.
d. none
Q. In case of inter-company holdings, the purchasing company, at the time of payment of the purchase consideration, surrenders the shares in the vendor company by crediting:
a. Vendor company's account
b. Shares in the vendor company account
c. Share capital account.
d. none
Q. The vendor company transfers preliminary expenses (at the time of absorption) to:
a. Equity shareholders' account
b. Realisation account
c. Purchasing company's account.
d. none
Q. A Ltd. and B Ltd. go into liquidation and a new company X Ltd. is formed. It is a case of:
a. Absorption
b. External reconstruction
c. Amalgamation.
d. none
Q. As per AS–14 purchase consideration is what is payable to
a. Shareholders
b. Creditors
c. Debenture holders
d. Shareholders and Debenture holders.
Q. In the case of ………………………. only one of the combining companies survivesand the other losses its separate identity.
a. Acquisition
b. Merger
c. Amalgamation
d. Formation
Q. ……………….is the amount payable by the purchasing companies to the vendorcompany for taking over the business of vendor company.
a. Goodwill
b. Total assets
c. Purchase consideration
d. None of these
Q. In absorption there is one ……………………and no formation.
a. Merger
b. Liquidation.
c. Demerger
d. Formation