Central sales tax (CST) is charged by the central government on interstate sales and collected by the state in which sales are made. Value added tax (VAT) is the multipoint tax collected at different stages of production and distribution.Central sales taxCentral sales tax (CST) comes under indirect tax levied by either central government or state government on sales. Retailers are responsible for collecting these taxes from customers and submit them to tax authorities.Central government levied tax on interstate sales whereas the state government levied tax on intrastate sales. Charges depend on commodities and can vary depending on commodities. Not all ... Read More

The term profit will differ from profession to profession. Businessmen will have different perspectives in terms of profit, economists will have different perspectives. According to accounts profit is nothing but excess of revenue over expenses.This profit is called accounting profit. Taxable profit had a different sense, amount taxable as per provisions of income tax act. Taxable profit is calculated by taking accounting profit, non-allowable expenses (added), allowable expenses (subtracted) and the resulting income is credited in a P & L account.Accounting profitIt results from operating activities and non-operating activities of the company. Accounting profit is the financial gain which is ... Read More

Acquisition strategy is the approach of acquiring products, services, and business by considering factors like brand, financial impact, culture, product etc. It plays a significant role in business expansion and plays part in growth of business.ElementsThe elements of an acquisition strategy are as follows −Business strategy − Talks about contracting approach (type of contracts, leasing arrangements etc.)Contracting strategy − Provides analysis and rationale.Major contracts − Identification of contracts and its types.Incentivise − Tells about incentives in detail.Technical data management − Long term technical data needs are assessed.Sustainment − Tells about acquiring integrated product support.StrategiesThe strategies of an acquisition strategy are ... Read More

Post-Merger Integration (PMI) is a process of merging two or more firms/organizations/companies to increase synergies and reach their forecasted value.Top executives, stakeholders, team members, Human Resources (HR), new management will take responsibility for post-merger activities. There is no period to complete the deal.Every merger has their own time frame (may be months, years).Post-Merger Integration (PMI) includes the following −Recruiting process − Based on short, long term needs, process and compensations.Overlap − Includes layoffs, benefit forms, securing top employees.Technology − Includes merger systems and new organisation charts.Performance − Includes training to employees, documents for review etc.AreasThe areas that come under the ... Read More

The main purpose of mergers and acquisition is to form different or same individual companies into one unit.Merger means combining similar companies (size) to form a new single unit whereas acquisition is when larger companies acquire smaller companies or absorption of smaller companies by bigger companies. Depending on the acquirer company board, the merger and acquisition can be friendly or hostile.Types of mergerThe types of merger are as follows −Horizontal − Merger between two similar companies.Vertical − Merger between company and customer/company in its supply chain.Conglomerate − Merger between companies in different sectors.Forms of integrationStatutory − Occurrence merger when acquirer ... Read More

According to accounting standards 14, amalgamation is done according to the nature of merger and nature of purchase. Amalgamation is the process of unification between two or more companies involved in similar business to form a new company.If the amalgamation nature of merger, method of accounting is used in pooling of interest method and if amalgamation nature of purchase then purchase method of accounting is used.Pooling of interest methodIn this acquired form the capital account is removed and this removed account is replaced by new stock of the acquiring company. In this method deal is nothing but exchange of equity ... Read More

Amalgamation is the process of combining two or more companies into a single company or absorption of one company by another.In absorption, bigger companies take control over smaller companies. The main difference between an amalgamation and a merger is that in amalgamation, neither of the companies exists. A new company is formed and both company's assets and liabilities are combined.TypesThe types of amalgamation are as follows −MergerIn this, in addition to assets and liabilities, shareholder's interest and business are pooled.The book adjustments are needed, if they want to carry the same business.PurchaseIn this, shareholders do not have proportionate equity shares ... Read More

Subsidiary mergers are divided into following −Forward triangular mergerReverse triangular mergerFirst, let us learn about the forward triangular merger.Forward triangular mergerIn a forward triangular merger, the company acquires another company through its subsidiary company.This type of merger is also called indirect merger.In this, a combination of cash and stock is used for financing. If only cash is used, that amount is taxable.AdvantagesThe advantages of forward triangular merger are as follows −More flexible.Cash and stocks are used for financing.More protection to buyers.DisadvantagesThe disadvantages of forward triangular merger are as follows −Less preferred.Have to reassess all contracts, licenses etc.Increase in costs for ... Read More

The reverse merger, forward merger and subsidiary merger are explained below along with their advantages and disadvantages.Reverse mergerIn reverse merger, A private firm becomes a public company.A smaller company obtains a bigger company.Parent company mergers with its subsidiary.Company in losses obtains the company in profits.AdvantagesThe advantages of reverse merger are as follows −Private firm become public company without IPOTax benefitsDisadvantagesThe disadvantages of reverse merger are as follows −Shareholders value remains the same.Can/sometimes lead to operations inefficiency.Forward mergerForward merger is also called direct merger. In this, two companies are combined directly to form a single company under the name of the ... Read More

Horizontal integration is a process when a company acquires/merges/takes over another company, who are in the same product line or its competitor.Company will go for horizontal integration to increase its size and capacity, to reduce its risk and competition, increase its market share and to expand its geographical area.ReasonsThe reasons to opt for horizontal integration are as follows −Growth in industry.Due to lack of expertise.To manage operations effectively.AdvantagesThe advantages of horizontal integration are as follows −Increase in product features and market reach.Increase its global presence.Cost reduction.DisadvantagesThe disadvantages of horizontal integration are as follows −Legal restrictions (depends on country legal laws).No ... Read More