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      Question

      In the merger of X Ltd. and Y Ltd., it is decided that

      the amalgamation will be in the nature of a merger (as per AS-14). Which of the following conditions must be satisfied for this treatment to apply?
      A Purchase consideration is paid in cash Correct Answer Incorrect Answer
      B 90% of the equity shareholders of transferor become shareholders of transferee Correct Answer Incorrect Answer
      C Assets are revalued Correct Answer Incorrect Answer
      D Business combinations must be non-pooling Correct Answer Incorrect Answer

      Solution

      AS-14 requires that for an amalgamation in the nature of a merger, 90% of equity shareholders of the transferor company must become equity shareholders of the transferee. This ensures continuity of ownership and operations.

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