Distinguish between pooling of interest method and purchase method.

Distinguish between pooling of interest method and purchase method are follows:

Pooling of Interests

This method is used in the case of amalgamation in the nature of Merger.

This method provides investors with less information.

All assets, liabilities, reserve and scar plus of the transferor company are incorporated in the financial statements of the transferee company at book value.

Under this method, no Amalgamation Adjustment Account is opened in the books of the transferee company.

The difference between the consideration and share capital of the transferor company is adjusted against reserves. No goodwill or capital reserve account emerges from this difference.

Purchased Method

This method is used in the case of amalgamation in the nature of Purchase.

This method provides investors with more information.

Only assets and liabilities taken over from the transferor company are incorporated in the financial statements of the transferee company either at book value of agreed values.

Under this method Amalgamation Adjustment Account must be opened in the books of the transferee company for carry forward of any “Statutory Reserve”.

The difference between the purchase consideration and the net assets taken over of the transferor company is corded as goodwill or Capital reserve, as the case may be.

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