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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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