What do you mean by amalgamation?
Amalgamation of firms takes place when two or more firms working independently merge their business into a single unit. The firms engaged in identical business combine their business activities and form into a new firm know as amalgamated firm.

Specify the different types of firms between whom amalgamation takes place?
Amalgamation may take place between:
(1) Two or more sole trading concerns.
(2) One or more sole trading concerns and a partnership firm.
(3) Two or more partnership firms.
(4) Any other type of firms with any permutation combination.

What are the consequences/result of amalgamation?
The result of amalgamation is that the combining units lose their independent identity (either as a sole trading concern or as old partnership firm) and the proprietors or the partners of the combining firms become the partners of the new firm.

What are the objectives of amalgamation?
Objectives of amalgamation are:
(1) To achieve the economies of large scale operations.
(2) To avoid cut throat competition.
(3) To increase capital.
(4) To enhance the efficiency of the firm by utilising the different talents of the partners.
(5) To maximize profits to economies of production.
(6) To minimize the cost of production to large-scale production.
(7) To establish monopoly in a particular trade.

Describe the process of amalgamation?
The process of amalgamation involves two stages of operations:
(1) Closing down the amalgamating firms, which have agreed to merge. For this purpose the assets & liabilities of the amalgamating firms should be revalued to ascertain the worth of capital to be transferred to the new firm.
(2) Opening the books of the new firm.

Specify the procedure of amalgamation?
The books of accounts of the amalgamating firms or firms may be closed by following any one of the procedures:
(1) By preparing Revaluation A/c to adjust the value of assets and liabilities (that have undergone some changes) and then transfer the assets and the liabilities to the new firm as agreed upon.
(2) By preparing Realisation A/c, where the new firm has taken over the business of the other firm or firms for an agreed consideration.

What accounting treatment would you give for the assets and liabilities not taken over by the new firm at the time of amalgamation? (November 2000)
Assets and liabilities not taken over by the new firm should be transferred to the Capital A/c's of the partners in the ratio of capitals like:
Liabilities A/c Dr.
To Capital A/c

Capital A/c Dr.
To Assets A/c