Handling Debit Balances in Capital Reserves Post Merger | Accounting and Disclosure

The merger of subsidiary with the parent means that the assets, liabilities, and reserves of the subsidiary company which appeared in the consolidated financial statements of the parent before the merger would now be part of separate financial statements of the parent. Further, the balance of the retained earnings appearing in the financial statements of the transferor is aggregated with the corresponding balance appearing in the financial statements of the transferee. Alternatively, it is transferred to the General Reserve, if any.

In this story, we have discussed the treatment of whether the parent company can recognize goodwill appearing in the pre-merger consolidated goodwill appearing in the pre-merger consolidated financial statements in the post-merger financial statements of the Company.

Click Here To Read The Full Story