Question

If the ABC Limited and DEF Limited are taken over by a new company XYZ Limited

Answer 1

Answer:

If the ABC Limited and DEF limited are taken over by a new company XYZ Limited results in amalgamation of two companies into one company.

Incase, the companies still survive their existence after acquisition then it is called as Merger.

Explanation:

Incase of Amalgamation:

As per accounting standard, amalgamation happens when two or more business entities combine to form into a single business entity.

All the assets and liabilities of the ABC limited and DEF Limited will be transferred to the XYZ limited.

ABC Limited and DEF limited are termed as transferor companies.

XYZ limited are known as transferee company.

Both, ABC limited and DEF limited are completely shutdown and loose their existence.

Answer 2

Answer:

it is called amalgamation