What is the difference between absorption, amalgamation and
liquidation of companies? And why realisation account is
being prepared ?
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Answer Posted / thouhid
1. Liquidation
Two or more companies are liquidated in the process of amalgamation. One or more companies are liquidated in absorption.
2. Formation
In amalgamation, a new company is formed to take over the business of vendor companies. In absorption, no new company is formed, only purchasing or absorbing company take over the business of liquidated company.
3. Size
There is no such matter of size of amalgamating companies. Generally, size of purchasing company is greater than that of vendor company in absorption.
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