demerger of companies
This query is : Resolved
11 January 2010
when a shareholder receives shares on demerger of companies, then what will be the accounting treatment for that in the books of shareholder as an investor?
11 January 2010
In principle the investor has just swaped his investments. Hence he will debit the investment in new company and credit the investment in old company with the same old price if there is no change in the value of the investment. In case the market value of new shares is less than the previous shares then P&L A/c will be debited with the balancing figure.
11 January 2010
why not we treat the shares received after demerger from resulting co as purchase consideration just like bonus share recived from comopanies, pls justify ?
11 January 2010
Normally the company issuing shares i. e. the demerger company issues the ratio in which the shares of both the companies should be divided is given
11 January 2010
aditya sir, i want to know the accounting treatment in shareholders portfolio
11 January 2010
Shares in A Ltd A/c Dr
to Shares in B Ltd. A/c
The entry should be made at the ratio of demerger as provided by the company
to Shares in B Ltd. A/c
The entry should be made at the ratio of demerger as provided by the company
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