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Calculaion of PC

Enayat Modiwala (IPCC) (48 Points)

04 May 2011

In net asset method for calculation of PC, do we consider liquidation expenses paid by purchasing company???

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7 Replies

CA Harsh (CFA level 2 candidate) (33 Points)
Replied 04 May 2011

no, according to AS 14 only paymnt made to shareholders is considered in PC.

(Guest)

Originally posted by : Harsh
	no, according to AS 14 only paymnt made to shareholders is considered in PC.

1 Like

mohsin (IPCC) (94 Points)
Replied 04 May 2011

WHILE CALCULATING PURCHASE CONSIDERATION,THE PROVISION OF AS-14 TO BE TAKEN INTO CONSIDERATION WHICH SAYS..........................->

(A) ONLY PAYMENT TO SHARE HOLDERS ARE TO BE TAKEN INTO CONSIDERATION

(B) CONSIDERATION FOR DEBENTURE HOLDERS WILL NOT BE INCLUDED IN PURCHASE CONSIDERATION

ALL THE BEST

1 Like

Viren (Chartered Accountant) (137 Points)
Replied 04 May 2011

Logically, Purcahse considerations is the Payment made to the Owners in the form of Cash, Shares Etc So Here Liquidation exp is not he Part of PC at all.

1 Like

Ramil (CA,L.L.B.) (Taxation) (147 Points)
Replied 04 May 2011

Dear Liquidation exps wont form part of purchase consideration as per AS-14.Just go through AS-14 , you will come to know that PC consists of what?

Any further query please ask.........

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Arjun M K (Student) (181 Points)
Replied 04 May 2011

The payments made to the members ( ESH and PSH) of the vendor company alone shall form part of PC. Settlement to debentureholders, creditors etc. & towards liquidation expenses by the purchasing company, are not to be recorded in the books of vendor company. This is para 3(g) of AS 14.