The Amalgamated company had brought forward losses of Amalgamating company to the extent of ₹ 23 lacs as on the date if amalgamation. It was able to set off loss to the tune of ₹ 12 lacs in the first year but in the second year it could not continue with the business of Amalgamating company and had to close that business. Choose the correct option:
A. The remaining loss of 11 lacs will lapse.
B. The remaining loss of 11 lacs will lapse and the set off of loss of ₹ 12 lacs allowed in the earlier year will be treated as the income of the amalgamated company.
C. The amalgamated company will continue to set off the remaining brought forward loss in future.
D. The amalgamating company will set off the remaining loss.
Answer:B
The Amalgamated company had brought forward losses of Amalgamating company to the extent of ₹ 23 lacs as on the date if amalgamation. It was able to set off loss to the tune of ₹ 12 lacs in the first year but in the second year it could not continue with the business of Amalgamating company and had to close that business. Choose the correct option:
A. The remaining loss of 11 lacs will lapse. B. The remaining loss of 11 lacs will lapse and the set off of loss of ₹ 12 lacs allowed in the earlier year will be treated as the income of the amalgamated company. C. The amalgamated company will continue to set off the remaining brought forward loss in future. D. The amalgamating company will set off the remaining loss.