From the statements given below, identify the correct code : Statement (I) : The key strategy behind acquiring a company is to create share holder’s value. Statement (II) : Conglomeration is a merger between two companies that have common business areas. Statement (III) : MRTP Act got replaced by the Competition Act, 2002 in India. Codes :
Statements (I) and (III) only are correct.
Statement (I): An acquisition is justified only when the combined firm is worth more than the two firms separately (synergy). The basic objective of acquiring another company is therefore to increase the wealth of shareholders. The statement is correct.
Statement (II): A conglomerate merger combines firms engaged in unrelated lines of business. A merger between companies in the same or common business areas is a horizontal merger (or a vertical one, if they are at different stages of the same chain). The statement is wrong.
Statement (III): The Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 was repealed and replaced by the Competition Act, 2002, which is administered by the Competition Commission of India. The statement is correct.
So Statements (I) and (III) are correct while Statement (II) is wrong.
Hence, the answer is Statements (I) and (III) only are correct..
Important Questions from Corporate Accounting
- The pre-acquisition profit of a subsidiary company is treated as __________.
Merger of two companies under the Board for Industrial and Financial Reconstruction (BIFR) supervision is known as
If invoice discounting is not confidential in nature, the customers of the client are advised to make payment directly to the factor. This facility, when offered with a non-recourse, is known as:
Given below are two statements:
One is labelled as Assertion A and the other is labelled as Reason R.
Assertion ‘A’: When holding company holds more than 50% (but not whole) shares of a company, then the holders of the rest of shares will be known as "Minority".
Reason ‘R’: Minority interest is calculated by considering proportionate shares and reserves of Holding Company.
In the light of the above statements, choose the most appropriate answer from the options given below:
- X Ltd. purchased 70 percent of the shares of Y Ltd. at a price of ₹ 1,00,000. Share capital of Y Ltd. was of ₹ 70,000 and its accumulated profits amounted to ₹ 90,000. What would be the amount of Minority Interest in the consolidated Balance Sheet ?
