The correct answer is Statutory Reserve in the books of the transferee company As per Accounting Standard-14, œAccounts for Amalgamation issued by ICAI Adjustment Account arises when some Statutory Reserves are required to be maintained by the Transferee Company which were earlier maintained in the accounts of the transferor company. Examples of statutory reserves are investment allowance of fair market value reserve, development exemption reserve, export profit reserve etc. In the books of the transferee company on cost basis, this amalgamation is done by debiting the adjustment account with currency and crediting the statutory reserve account. The amalgamation adjustment appears as a debit to the Reserve Account.