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    Question

    Company A and Company B merge to form Company AB. Assets

    and liabilities are taken over at book value, and shareholders of both companies continue to have similar ownership in the new entity. Which method of amalgamation is applicable?
    A Purchase method Correct Answer Incorrect Answer
    B Pooling of interest method Correct Answer Incorrect Answer
    C Reconstruction Correct Answer Incorrect Answer
    D Acquisition Correct Answer Incorrect Answer

    Solution

    When amalgamation is in the nature of merger (continuity of ownership, book value), pooling of interest method is applied per AS-14.

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