Disclosure under AS 14, and Amalgamation after the Balance Sheet Date

In one line

Every amalgamation discloses four things; each method adds two more; and an amalgamation after the balance sheet date is disclosed but not incorporated.

The three lists

For all amalgamations, paragraph 43:

• names and general nature of business of the amalgamating companies;
• effective date of amalgamation for accounting purposes;
• the method of accounting used to reflect the amalgamation; and
• particulars of the scheme sanctioned under a statute.

For amalgamations accounted for under the pooling of interests method, paragraph 44 adds:

• description and number of shares issued, together with the percentage of each company's equity shares exchanged to effect the amalgamation;
• the amount of any difference between the consideration and the value of net identifiable assets acquired, and the treatment thereof.

For amalgamations accounted for under the purchase method, paragraph 45 adds:

• consideration for the amalgamation, and a description of the consideration paid or contingently payable; and
• the amount of any difference between the consideration and the value of net identifiable assets acquired, and the treatment thereof, including the period of amortisation of any goodwill arising on amalgamation.

All of these are for the first financial statements following the amalgamation.

The one word that differs

Paragraphs 24 to 26 sit in the Explanation and say these disclosures are considered appropriate. Paragraphs 43 to 45 sit in the Main Principles and say they should be made.

The Main Principles are the operative part of the standard, and the note at the head of AS 14 records that paragraphs in bold italic type and plain type have equal authority. So the disclosures are required, and the Explanation's softer wording is the reasoning rather than the rule.

The two extra disclosures under the purchase method

Comparing paragraph 44 with paragraph 45 is a fair examination question, and the difference is instructive.

Under pooling the interesting fact is the exchange, because the shareholders continued. Under purchase the interesting fact is the price, because a purchase was made.

Amalgamation after the balance sheet date

Paragraph 46, and paragraph 27 as its Explanation.

When an amalgamation is effected after the balance sheet date but before the issuance of the financial statements of either party, disclosure is made in accordance with AS 4, Contingencies and Events Occurring After the Balance Sheet Date, but the amalgamation is not incorporated in the financial statements.