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      Question

      State which statement is correct:

      A In case of merger – We use pooling of interest method for accounting. Correct Answer Incorrect Answer
      B In case of purchase – We use purchase method or pooling of interest method depending upon whether it is takeover at agreed values or book values. Correct Answer Incorrect Answer
      C Both (a) and (b) are correct. Correct Answer Incorrect Answer
      D Only (a) is correct. Correct Answer Incorrect Answer

      Solution

      Explanation:According to AS-14 on Amalgamations:

      • In case of merger, pooling of interest method is used.
      • In case of purchase, either purchase method or pooling of interest method may be used depending on conditions.

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