Amalgamation
This query is : Resolved
ANAND MISHRA
(Querist)
14 December 2012
Dear sir /madam
One of my client is undergoing amalgamation in the nature of merger . they have intercompany holding .I said them to wite off the value of investment through general raserve in the books of transferee company. when it comes to allotment of purchase consideration I passed the entry as
ESH of ...co.
To ES of transferee co.
but the balance sheet didn't match .The problm is when I credited the amount of Equity share by purchase cosideration the liability side stands incresed but where shall I show the corresponding debit entry. Goodwill doesn't arise in the nature of merger.
One of my client is undergoing amalgamation in the nature of merger . they have intercompany holding .I said them to wite off the value of investment through general raserve in the books of transferee company. when it comes to allotment of purchase consideration I passed the entry as
ESH of ...co.
To ES of transferee co.
but the balance sheet didn't match .The problm is when I credited the amount of Equity share by purchase cosideration the liability side stands incresed but where shall I show the corresponding debit entry. Goodwill doesn't arise in the nature of merger.
Amol S Joglekar
(Expert)
14 December 2012
you need to decide the exchange ration first. Accordingly the AMALGANATING company will have capital reserve/goodwill as balancing figure.
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ANAND MISHRA
(Querist)
14 December 2012
DEAR SIR ,
DO U KNOW THAT GOODWILL AND CAPITAL RESERVE DOES NOT ARISE IN THE CASE OF MERGER
DO U KNOW THAT GOODWILL AND CAPITAL RESERVE DOES NOT ARISE IN THE CASE OF MERGER
Amol S Joglekar
(Expert)
14 December 2012
Thanks for UPDATES. (By the way, appreciate if you could enlighten me about the procedure followed for deciding EXCHANGE RATIO.)
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ANAND MISHRA
(Querist)
15 December 2012
Dear sir,
the exchange ratio are as follows
A-B 7:1
A-C 1:63
the exchange ratio are as follows
A-B 7:1
A-C 1:63
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