please look question no. 2 on dis page
https://220.227.161.86/15425paper1_final_new_gp1.pdf
my question is dat
why net asset method is followed while calculating purchase consideration ???
purchase consideration can be calculated directly and goodwill can be recognised by comparing it with net assets !!!!
can i do in this way ??
nowhere in question is written dat calculate P.C. with net asset method ...
Dear Hammad, as per teh question given the amalgamation is in the nature of purchase & not in the nature of merger, because the assets & liabilities are not being taken at book values but subject to certain modifications. So the net assets method is being applied to arrive at teh PC for the purpose of valuation of shares.
Please refer AS-14 for more clarification.
Dear Hammad,
We also agree that if Payment method is applicable, we shall not consider net asset method. We shall go for Net asset menthos only , if payment amount is not directly ascertainable from the question.
If you will see the question, it is given only paymentto equity shareholders to be made at 10 +5 per share. But how may sharss ? Not given. So we can not tell how much is to be paid to equity shareholders.
hence, total PC is calculated by net asset method & after deducting the Pref share holders portion balance will be for Equity share hoders.
Give your views.
thanks,
CAclubindia
