1. What is Amalgamation?
Two or more businesses combine together to form a new business entity.
1. To pool resources and expertise.
2. To reduce costs.
3. To become a stronger force.
4. To reduce competition.
2. Revaluation of business before Amalgamation:
i. Revaluation of Assets of the entries:
-So that partners of the new business can agree on the values of the assets that they are willing to accept as the capital contribution of each partner.
1. Going concern concept: Business is assumed to operate indefinitely unless there are signs that it has to stop operating.
2. Historical cost concept: All business transactions are to be recorded at its original cost.
-Gain from revaluation of assets: Dr Asset, Cr Capital (Asset increase, Capital increase)
-Loss from revaluation of assets: Dr Capital, Cr Asset (Asset decrease, Capital decrease)