Can any one tell me the when we calculate the purchase consideration then assets are taken at agreed values if given otherwise book values but i didnt understand that in some question debetures are taken in current liabilities & in some question it is not taken so can anyone tell me when it is taken & not taken
plz help me
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........
CAclubindia
