Cost of liquidating a company
Replica of an East Indiaman of the Dutch East India Company/United East India Company (VOC).
The VOC was formed in 1602 from a government-directed consolidation/amalgamation of several competing Dutch trading companies (the so-called voorcompagnieën).
The taxation term of consolidation refers to the treatment of a group of companies and other entities as one entity for tax purposes.
Under the Halsbury's Laws of England, 'amalgamation' is defined as "a blending together of two or more undertakings into one undertaking, the shareholders of each blending company, becoming, substantially, the shareholders of the blended undertakings.
The company does not need any entries to adjust this account balance unless the investment is considered impaired or there are liquidating dividends, both of which reduce the investment account.
Liquidating dividends : Liquidating dividends occur when there is an excess of dividends declared over earnings of the acquired company since the date of acquisition.
This balance increases with income and decreases for dividends from the subsidiary that accrue to the purchaser.If other factors exist that reduce the influence or if significant influence is gained at an ownership of less than 20%, the equity method may be appropriate (FASB interpretation 35 (FIN 35) underlines the circumstances where the investor is unable to exercise significant influence).To account for this type of investment, the purchasing company uses the equity method.There may be amalgamations, either by transfer of two or more undertakings to a new company, or to the transfer of one or more companies to an existing company".Consolidation is the practice, in business, of legally combining two or more organizations into a single new one.