a proprietorship firm was taken over by a pvt ltd co. Now the takeover consideration was given more than what was decided, can the extra part be treated as goodwill?
Again the takeover a/c has transactions like money given & taken back, is this allowed in take over a/c?
A loan was given to director & shareholder of pvt ltd co. as this is not allowed, now what can be done in this regard?
16 February 2011
1. Usually in takeover the proprietor of the proprieory concern is issue share of Private Limited Company. But in your present case it seems money is given. If the money is given above the valuation. The necessary entery needs to be given as per Accounting standard.
2. I dont understand money given and taken back. If money is given as a purchase of prop concern and subsequently the said proprietor has given money back but in what form. Loan? if yes he should be member of the said Private Limited Company as per Section 3 of the Co's Act. If the money given back to the Company in form of Share application and shares are issued?
3. Sec.295 is not applicable to Private Limited Company hence Company may give loan to directors.
If you can provide your query in detail, i can advise you the best mode to solve. You may contact me at kinjal@ksshahandco.com
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