Comment on the following: Accounting Standard-14 is applicable to demerger.

Accounting Standard-14 (Accounting for Amalgamations) is applicable only in case of amalgamation and not in case of demerger. Accounting Standard-14 lays down the accounting and disclosure requirements in respect of amalgamations of companies and the treatment of any resultant goodwill or reserves. In the scheme of arrangement between Sony India Private Limited (Sony India) and Sony Software Centre Private Limited (Sony Software), the Delhi High Court, while approving scheme of arrangement between Sony India has clarified that AS-14 is applicable only to amalgamations and not to demerger. The same was also upheld by Gujarat High court in the case of Gallops Realty Private Limited.