Computation of purchase consideration

Save Share

This query is : Resolved

Lekh Mehta (Querist)

20 February 2016 I have to compute the purchase consideration used by Thick Ltd to buy Thin Ltd. The assets and liabilities of Thin Ltd on the date of amalgamation being: Land and building 180000 Plant and machinery 125000 Stock 250000 Debtors 290000 Cash at Bank 15000 Paid up shs (10 rupees) 600000 Prov for doubtful debt 10000 Creditors 75000 The purchase price was to be discharged by the allotment to the shareholders of the vendor company of 8 shares of 10 rupees each( 9 rupees paid up) of the purchaser company for every 10 shares in the vendor company. Dissenting shareholders of 500 shs are paid out as 14 rupees per share.

Amol S Joglekar

Amol S Joglekar (Expert)

20 February 2016 What is the market value of land and building? Also quote the agreed prices of other assets so as to arrive at the figure of capital reserve / goodwill.

Lekh Mehta

Lekh Mehta (Querist)

20 February 2016 the prices given in the question are the agreed value.

Lekh Mehta

Lekh Mehta (Querist)

20 February 2016 the prices given in the question are the agreed value

Amol S Joglekar

Amol S Joglekar (Expert)

23 February 2016 Then what is your difficulty now? Find out the number of shares to be distributed,,,,it is coming 48,000 shares of Thick Ltd, Rs.9 paid for existing 60,000 shares of Thin Ltd. Add 7000 to this for the dissenting share holders; 500 in number @ Rs.14 each

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now