CA Inter Advanced Accounting key terms

A business combination where all assets and liabilities of the transferor are taken over, shareholders holding substantially all shares become shareholders of the transferee, and the businesses continue jointly; pooling of interests method applies.

A business combination that fails the conditions for a merger, so the acquirer records acquired assets and liabilities at fair values and recognises goodwill or capital reserve on the difference.

Accounting for a merger that carries forward the transferor's book values, records reserves as reserves, and adjusts the difference between consideration and share capital against reserves rather than recognising goodwill.

Accounting for an acquisition where identifiable assets and liabilities are recorded at fair values or existing carrying amounts, and the excess of consideration over net assets acquired is recognised as goodwill.

The total amount payable by the transferee company to the transferor company, including cash, shares issued and liabilities taken over, computed by methods such as net assets, net payment or lump sum.

A way of computing purchase consideration by totalling the agreed values of assets taken over and deducting the agreed values of liabilities assumed, giving the amount payable to the vendor.

A way of computing purchase consideration by adding the cash paid, shares and debentures issued and liabilities taken over, excluding any asset realisation expenses paid by the transferee.

An intangible asset representing the excess of purchase consideration over the fair value of identifiable net assets acquired, reflecting expected future benefits from synergies and reputation.

The excess of the fair value of identifiable net assets acquired over the purchase consideration, recorded as a capital reserve under Indian accounting standards rather than as income.

A reserve created from capital profits such as profits prior to incorporation, revaluation surplus or negative goodwill, generally not available for distribution as dividend.

The portion of a company's profit earned between the date of the vendor's business purchase and the date of incorporation, treated as a capital profit and credited to capital reserve.

The proportion of the accounting period before incorporation to the whole period, used to apportion time-dependent expenses and income between pre- and post-incorporation periods.

The proportion of sales of the pre-incorporation period to total sales, used to apportion gross profit and variable expenses between pre- and post-incorporation periods.

Profit earned from the date of incorporation onwards, treated as revenue profit available for dividend and transferred to the profit and loss appropriation account.

Internal reorganisation of a company's capital structure, either by reducing share capital and cancelling losses or by altering share classes, without forming a new company.

A court-sanctioned reduction of share capital under the Companies Act, used to write off accumulated losses or reduce asset values, requiring approval by special resolution and confirmation.

An account opened on internal reconstruction to which reductions in paid-up capital and reserves are credited and write-offs of losses and assets are debited, its balance being transferred to capital reserve.

Reorganisation of a company's internal capital structure through reduction of capital, variation of rights or conversion of debt, without liquidating the entity or transferring its business.

A situation where a new company is formed to take over the business of an existing loss-making company, which is liquidated, with the transaction accounted for as an amalgamation.

The process of winding up a company, realising its assets, paying liabilities and distributing any surplus to shareholders, with a liquidator appointed to administer the process.

A statement prepared at the end of winding up showing assets realised, expenses of liquidation, payments to creditors and the surplus or deficiency distributed among contributories.

A person liable to contribute to a company's assets on winding up, generally a present or past member holding shares, subject to limits on past-member liability.

Creditors entitled to priority payment on winding up under the Companies Act, such as employees' wages and government dues, ranking ahead of ordinary unsecured creditors.

Creditors holding a charge over specific company assets, who may realise the security or surrender it and claim as unsecured creditors for any shortfall in winding up.

A company carrying on banking business, whose financial statements follow statutory formats and disclosure rules, including provisioning for non-performing assets and statutory reserves.

A loan or advance where interest or principal has remained overdue for more than 90 days, requiring classification as substandard, doubtful or loss and provisioning accordingly.

The percentage of net demand and time liabilities that a bank must maintain as cash balances with the central bank, reducing funds available for lending.

The minimum percentage of net demand and time liabilities a bank must hold in liquid assets such as government securities, cash and gold before lending.

An entity carrying on life or general insurance business, whose accounts follow statutory forms and distinguish revenue account, profit and loss account and balance sheet.

A mathematical assessment by an actuary of future liabilities and premiums of an insurer, used to determine reserves and the surplus or deficit transferred to shareholders.

The consideration received by an insurer for undertaking risk, recognised as income over the policy period and subject to adjustments for unexpired risk.

A provision created out of premiums for the portion of risk not yet expired at the reporting date, computed at a prescribed percentage of net premiums.

Amounts payable by an insurer on the occurrence of insured events, recognised as an expense and adjusted for claims outstanding, incurred but not reported and reinsurance recoveries.

Insurance taken out by an insurer to transfer part of its risk to another insurer, with premiums ceded and claims recoverable recognised separately in the accounts.

An entity engaged in generation, transmission or distribution of electricity, whose accounts follow statutory formats and include capital expenditure, depreciation and tariff-related disclosures.

Costs incurred on assets not yet ready for their intended use, disclosed separately in the balance sheet and not depreciated until the asset is commissioned.

Systematic allocation of the depreciable amount of an asset over its useful life, applying methods such as straight line or written down value, including changes in estimates.

A reserve created when an asset is revalued upwards, credited with the increase over carrying amount and generally not available for dividend distribution.

Property held to earn rentals or for capital appreciation rather than for use in production or administration, measured under the cost or fair value model with prescribed disclosures.

Accounting for a dependent branch by maintaining a branch account in the head office books, recording goods sent, remittances and expenses to arrive at branch profit.

Recording goods transferred to a branch at a price above cost, requiring adjustment of loading in stock and profit figures to restate them at cost.

A branch that maintains its own complete books, remits profits to the head office and reconciles inter-branch balances through a head office current account.