Accounting Standard-14 is Accounting for Amalgamations. It is an Indian accounting standard issued by the Institute of Chartered Accountants of India (ICAI). The standard was issued in 1991 and revised in 2003. The standard deals with the accounting treatment of amalgamations.
An amalgamation is a combination of two or more companies into a single company. The acquiring company is the company that survives the amalgamation and the acquired company is the company that ceases to exist.
The standard requires that the acquiring company should account for the amalgamation as a purchase of assets and liabilities. The cost of the amalgamation should be equal to the fair value of the net assets acquired. The fair value of the net assets acquired should be determined based on the market value of the assets and liabilities of the acquired company.
The standard also requires that the acquiring company should recognize any goodwill arising from the amalgamation. Goodwill is the difference between the cost of the amalgamation and the fair value of the net assets acquired. Goodwill should be amortized over a period of not more than 20 years.
The standard also provides guidance on the accounting treatment of certain specific issues that may arise in amalgamations, such as the treatment of deferred tax assets and liabilities, the treatment of pensions and other post-employment benefits, and the treatment of contingent liabilities.
The standard is intended to provide a consistent and transparent accounting treatment for amalgamations. The standard is also intended to ensure that the financial statements of the acquiring company reflect the economic substance of the amalgamation.
The following are the options for the question “Accounting Standard-14 is”:
- A. Accounting for amalgamation
- B. Accounting for government grant
- C. Accounting for investment
- D. Accounting for intangible asset
The correct answer is A. Accounting for amalgamation.
Option B, Accounting for government grant, is incorrect because Accounting Standard-10 deals with accounting for government grants.
Option C, Accounting for investment, is incorrect because Accounting Standard-11 deals with accounting for investments.
Option D, Accounting for intangible asset, is incorrect because Accounting Standard-26 deals with accounting for intangible assets.