Company B,C,D (TransferorCo.) merged with the Company A (Transferee Co.) in pursuance of Court order by way of Amalgamation in the nature of Merger.
The Company opting Pooling of Interst method.
At the time of Consolidation of Financials of Transferor Company with the Transferee Company the Auditor find that the Consideration by way of Equity Shares as per exchange ratio are excess over the Net assets transfred from the Transferor Companies. The auditor follow the AS-14 and adjusted excess consideration with the R&S of the Consolidated Accounts.
But at the time of Adjustment Auditor fins that the balance in R&S are not sufficient to coverup the excess consideration.
Now What the Company as well as Auditor has to do.
23 July 2010
This means the consideration paid by the purchasing company is more than the value. hence the difference is excess which should be refunded back to the purchasing company. till then you show that in purchase consideration account.
Querist :
Anonymous
Querist :
Anonymous
(Querist)
23 July 2010
Sir,
Does meean that the Excess consideration payable by the Copany in the form of Equity, to be Charged to the Shareholders and the same amount be taken from them.
23 July 2010
our standard permits payment in cash only to the extent of rounding off for fractional shares in case of pooling of interest method.
If such calculation is made at before issue of PC, then 99% of that should have been in shares and the balance in cash towards rounding off of fractional shares. but I think this is not the case here. hence post the excess should be identified and should be refunded in the form of cash.
CAclubindia
