Amalgamation

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SHUVRO (Querist)

10 November 2012 can anyone please explain as

1. why the paid up capital of selling co. as hold by the purchasing co. is cancelled by the selling co. by transferring the same to realisation a/c in the case of amalgamation of two cos.when purchasing co. is holding shares of selling co.

2. in case of selling co holding shares in purchasing co,when we are accounting as per merger in transferee books we adjust the reserves of selling co. by the figure of (paid up capital of selling co.- purchase consideration and investment held by selling co. in purchasing co.)
but in case of purchase method while calculating goodwill/capital reserve we only take into account of the net PC (without the value of investment held by the selling co in purchasing co)

i want to have a clear concept regarding this.

Amol S Joglekar

Amol S Joglekar (Expert)

11 November 2012 01. To find out goddwill / capital reserve.
02. Purchase consideration has many practical aspects. As I always tell, these are the methods of expression...say 2 years purchase of 3 years average profit and so on. Try to find out the real intention behind such BOOKISH & EXAMINATION oriented language.

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