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Amalgamation (purchase consideration)

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Lahari

Student CA IPC / IPCC

36 Points Posted on 29 January 2020

while calculating purchase consideration, should premium be calculated on nominal value or paid up value?.
In illustration 7 of IPCC text book, the premium is calculated on paid up value. can someone please clarify this. thank you.

Replies (2)

Quick Summary

This discussion addresses a key question in calculating purchase consideration: should the premium be based on the nominal value or the paid-up value of shares? The consensus is that the calculation depends entirely on the specific terms outlined in the amalgamation, merger, or reconstruction agreement. It's crucial to check the agreement or question details, as these documents will specify whether the premium is applied to the nominal or paid-up value.

ACCOUNTANT

Student

552 Points Posted on 02 February 2020

Premium will be in terms of the agreement of amalgamation or merger or reconstruction..... If they say they are paying premium on nominal value...it will be so.. .or if they say on paid up value it will be so... Anyway it will be mentioned in the question.. .please check... Please correct me if I am wrong

Guest

Posted on 03 February 2020

Originally posted by : Lahari
	while calculating purchase consideration, should premium be calculated on nominal value or paid up value?.In illustration 7 of IPCC text book, the premium is calculated on paid up value. can someone please clarify this. thank you.