Preparation of Amalgamated Balance Sheet (Excluding inter- Company holdings) applying AS 14/Ind AS 103

The preparation of an amalgamated balance sheet involves the consolidation of the financial statements of the merging companies. This process is carried out to present the financial position of the amalgamated entity as a single economic entity. The Accounting Standard (AS) 14 or Ind AS 103 lays down the principles for accounting for amalgamations.

Steps of Amalgamated Balance Sheet:

Step 1: Prepare the opening balance sheet of the amalgamated company:

The opening balance sheet of the amalgamated company is prepared by combining the assets and liabilities of the merging companies. This is done by eliminating any inter-company transactions and balances. Any excess of consideration paid over the fair value of the net assets acquired is recognized as goodwill.

Step 2: Combine the Assets and Liabilities of the Merging Companies:

The assets and liabilities of the merging companies are combined in the amalgamated balance sheet. Any inter-company transactions and balances are eliminated. The assets and liabilities are recognized at their fair values on the date of the amalgamation.

Step 3: Eliminate the inter-company Holdings:

Any inter-company holdings in the assets or liabilities of the merging companies are eliminated. This is done to avoid double-counting of assets or liabilities.

Step 4: Adjust for Goodwill:

Goodwill is the excess of the consideration paid over the fair value of the net assets acquired. Goodwill is recognized in the amalgamated balance sheet as an intangible asset. It is shown separately from other assets and liabilities.

Step 5: Present the Amalgamated Balance Sheet:

Finally, the amalgamated balance sheet is presented in the format prescribed by the relevant accounting standard.

Preparation of Amalgamated Balance Sheet:

Format of Amalgamated Balance Sheet