Which of the following is true about amalgamation?
a) Amalgamation results in the formation of a new company.
b) Amalgamation occurs when one company acquires another company.
c) Amalgamation results in the dissolution of both companies.
d) Amalgamation is only possible in the banking sector.
What is the main difference between absorption and amalgamation?
a) In absorption, only one company survives, while in amalgamation, both companies cease to exist.
b) In amalgamation, one company absorbs the other.
c) Absorption always leads to the creation of a new company.
d) Amalgamation results in the merger of two companies into a new entity.
Which of the following is NOT true about absorption?
a) It involves the transfer of assets and liabilities from the absorbed company to the absorbing company.
b) The absorbing company continues its operations, while the absorbed company ceases to exist.
c) It results in the formation of a new company.
d) Absorption can be voluntary or forced.
What is the primary purpose of reconstruction of a company?
a) To form a new company through merger
b) To change the structure of the company’s capital or operations
c) To dissolve the company and liquidate its assets
d) To issue additional shares to the public
What is the primary accounting method used in the amalgamation of companies?
a) Purchase method
b) Cost method
c) Pooling of interest method
d) Equity method
Which of the following is a characteristic of amalgamation in the nature of merger?
a) The companies involved cease to exist, and a new company is formed.
b) Only one company survives while the other ceases to exist.
c) One company absorbs another without forming a new company.
d) No company is dissolved, and they continue their separate existence.
Which is a type of reconstruction that involves changing the financial structure of the company?
a) External reconstruction
b) Internal reconstruction
c) Corporate restructuring
d) Mergers and acquisitions
What does the term ‘schemes of amalgamation’ refer to?
a) Methods to evaluate the assets of a company
b) Plans that outline the terms and conditions of a merger or amalgamation
c) Procedures for determining the stock prices after an amalgamation
d) Methods to liquidate a company’s assets
Which of the following statements is true about absorption?
a) The absorbed company continues to exist as a separate entity.
b) The absorbing company acquires the assets and liabilities of the absorbed company.
c) Absorption always results in the formation of a new company.
d) The shareholders of the absorbing company lose their stake.
Which of the following is NOT a reason for corporate reconstruction?
a) To improve the company’s profitability
b) To improve the financial position of the company
c) To remove or reduce debts and liabilities
d) To create a new company for expansion purposes
What is the legal status of a company after an amalgamation?
a) The company ceases to exist and is liquidated.
b) The company continues to exist as a separate entity.
c) The amalgamated company continues to exist under a new name.
d) A new company is formed and the previous companies are dissolved.
In the context of corporate reconstruction, what is meant by a ‘scheme of arrangement’?
a) A plan to liquidate the company’s assets
b) A legal document outlining the terms for the merger or amalgamation
c) A method of distributing profits among shareholders
d) A plan for employee compensation in case of closure
What is a common method used for valuation of assets during amalgamation?
a) Fair value method
b) Book value method
c) Liquidation value method
d) Market value method
Which of the following best describes an external reconstruction of a company?
a) The company issues new shares to its existing shareholders.
b) A company reorganizes its internal management and capital structure.
c) A company merges with another company or is absorbed by another company.
d) A company sells its assets and goes into liquidation.
What is the effect of amalgamation on the assets of the companies involved?
a) The assets of the companies are divided among the shareholders.
b) The assets are sold off to pay off liabilities.
c) The assets are transferred to the new or absorbing company.
d) The assets are redistributed between the companies based on ownership.
Which type of reconstruction is related to the arrangement of the company’s capital?
a) Financial reconstruction
b) Operational reconstruction
c) Structural reconstruction
d) Internal reconstruction
In case of a merger, the financial statements of both companies are:
a) Combined and presented as a single set of financial statements.
b) Kept separate and not affected.
c) Only the acquired company’s statements are used.
d) Only the acquiring company’s statements are kept.
What is the main purpose of an absorption in corporate restructuring?
a) To divide the company into separate entities
b) To reduce the debt burden of the company
c) To merge two or more companies into one, with one company continuing to exist
d) To liquidate the company’s assets
Which of the following is a disadvantage of amalgamation?
a) Increased market share
b) Cultural clash between merging companies
c) Reduction in operational costs
d) Enhanced access to financial resources
Which of the following is NOT a possible outcome of a reconstruction?
a) Formation of a new company
b) Reorganization of assets and liabilities
c) Merging of two or more companies
d) Liquidation of the company
Which of the following can result from a financial reconstruction?
a) Reduction in share capital
b) Formation of a new company
c) Merger of companies
d) All of the above
What is the primary reason for a company to undergo absorption?
a) To enter into a new market segment
b) To eliminate competition and reduce costs
c) To expand its operations by acquiring assets
d) To change the company’s ownership structure
What document is typically required for approval in an amalgamation process?
a) A share purchase agreement
b) A formal merger proposal
c) A scheme of arrangement or merger agreement
d) A board resolution
