Amalgamation

If Transferee( Buying) Company Taking over (purchasing ) the Debentures of Trasferor (selling) company along with other Liabilities then only Debentures will include in Purchase Consideration otherwsie not...

hope u got the point..revert back for Further Query.

Regards

A Ltd takes over B Ltd on 10-04-2002. the P.C. is discharged by as follows:

(i) Issued 350000 equity shares of Rs.10 each at par with the equity shareholders of B Ltd.

(ii) Issued 15% Preference shares of Rs. 100 each to discharge the preference shareholders of B Ltd. (Rs. 17,00,000 in B/S as on 31.3.2002 )at 10% premium.

(iii) the debentures holders of B Ltd will be converted into equivalent number of debentures of A Ltd.

then P.C. is calculated as follows;

equity shareholders of B Ltd.                  35,00,000

preference shareholders of B Ltd.         18, 70,000

total                                                               53,70,000

debentures are not considered y??????

plz help
 

Dear Arun

ACCORDING TO AS 14...Purchase Consideration should be paid  only to Shareholders of  the Transferor (selling) company.

Pucharse Consideration Cannot Paid to Outsiders i.e Debenture holder,creditors etc.

So Payment Made to Debenture Holders cannot included in PC Calculation in Lumpsum payment method

But if u r Calculating PC By NET ASSET Method..Then amount of Debentures ( if its Taken over by Transferee comapany) will be taken into account  to find out the amount of Net Asset.  i.e  ( Asset - Liabilities).

SO IN UR CASE  AMOUNT OF DEBENTURE CANNOT BE CONSIDERED IN PC.

Regards

Thanx "SAN" for ur valuable suggestion to me

Regards

Arun Kumar
 

u r welcome

Anyone plz help me in calculating Purchase consideration in all possible cases.

its urgent........