BALANCE SHEET OF VENDOR CO.
LIABILITIES
Share capital 10000 shares @ ₹50.
₹30called up. 30000
reserve fund. 62500
profit and loss account. 30000
creditors. 37500
Total 430000
ASSETS
free hold property. 125000
plant and machinery. 25000
stock. 150000
investment. 5000
sundry debtors 100000
Bank. 25000
Total. 430000
Purchaser company took all the Assets and liabilities of the vendor company. A sum of ₹ 7500 was retained by the vendor companies for the payment of expenses of liquidation ,income tax liabilities and settlement of dissenting shareholders.
Vendor company was allotted 1 share of ₹100 each,₹50 paid up for 2 share held by shareholders.
Out of the amount 7500 retained by the liquidator Of vendor companies were made as under:
cost of liquidation 1250 income tax 3750 and dissenting shareholders holding 50 shares ₹32.50 share i.e. ₹1625. The market value of share of purchases company is ₹60 per share.
How to compute purchase consideration and what will be the Purchase consideration.
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Amalgamation
Replies (7)
PC will be calculated on net payment basis
hence, (10000-50)/2*60=298500+7500=306000
This is the amount which purchase is going to pay 4975 shares @ 60 + 7500 cash payment to target company
hope this is correct....
Is vendor companies initially has to convert the shares into fully paid up shares or called up the uncalled amount
and then to allot one share of of ₹100 each, for ₹50 paid up for 2 shares held by shareholders..?????
and then to allot one share of of ₹100 each, for ₹50 paid up for 2 shares held by shareholders..?????
I dont think it is relevant for computation of purchase consideration unless it is required by amalgamation rules
See page no 18 illustration 66 - X bank case
and if it is required to call unpaid capital it will be really very tough to conclude the transaction by calling unpaid capital and then issue partly paid up shares in consideration.
even i dint find anything on partly paid up shares in amalgamation rules (draft available on internet)
Better if you can share source of this question.
Source of question is assignment given in institute
source is not worthy
Till now I don't get understood
But thanks for your efforts to help me
But thanks for your efforts to help me
Till now I don't get understood
But thanks for your efforts to help me
But thanks for your efforts to help me
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