What do you mean by the amalgamation? What are the different forms of amalgamation ? Give in brief.

Amalgamation means to unite or to combine. Generally, the term 'amalgamation' is used when two or more existing companies go into liquidation and a new company is formed to take over their business and the term 'absorption' is used when one or more existing companies go into liquidation and one existing company takes over or purchases the businesses of all companies. However, the difference between amalgamation and absorption has been dispensed with by the Accounting Standard (AS-14) - Accounting for Amalgamations issued by the ICAI. Thus the term amalgamation includes absorption. Types of Amalgamation Generally, there are two basic methods under which companies can unite together Amalgamation in the nature of Merger: The amalgamations where there is a genuine pooling not merely of the assets and liabilities of the amalgamating companies but also of the shareholders' interests and of the businesses of these companies. Such amalgamations are amalgamations which are in the nature of 'merger' and the accounting treatment of such amalgamations should ensure that the resultant figures of assets, liabilities, capital and reserves more or less represent the sum of the relevant figures of the amalgamating companies. An amalgamation is classified as an 'amalgamation in the nature of merger' when all the five conditions stated therein are satisfied. Amalgamation in the Nature of Purchase: The amalgamations which are in effect a mode by which one company acquires another company and, as a consequence, the shareholders of the company which is acquired normally do not continue to have a proportionate share in the equity of the combined company, or the business of the company which is acquired is not intended to be continued. Such amalgamations are amalgamations in the nature of purchase. If any one or more conditions listed in the amalgamation in the nature of merger is not satisfied, it is amalgamation in the nature of purchase.