Directions: Choose the correct option for the given question.

At the time of amalgamation 'capital reserve or goodwill' account is opened in the books of --------- Co.

At the time of amalgamation (merger), the difference between the net assets taken over and the purchase consideration paid is calculated. If the purchase consideration is more than the net assets, the difference is debited to Goodwill Account. If the net assets are more, the difference is credited to Capital Reserve Account. This account (either Capital Reserve or Goodwill, whichever arises) is opened in the books of the Transferee Company (the absorbing company), not the Transferor Company (which ceases to exist after amalgamation). The transferee records the acquired assets, liabilities, and the resulting goodwill or capital reserve.