Doubt

Others 843 views 4 replies

while computing puchase consideration why shares are valued at market value and not at face value

Replies (4)

Shares are normally purchased and sold at market value through a stock exchange. Hence market value is taken as purchase consideration.

we calculate Purchase consideration on Market Value in Case of BUsiness Purchase is in the Nature of "Purchase " to have a correct value of Consideration Paid to the shareholders.For eg. Suppose Mr. X have 1000shares face value Rs.10,and Market value of Rs 100.will he ever think of selling it for Rs.10..Ans -no,So The purchase consideration is settled at market value ,

In case of Purchase in the"Nature of Merger" share holders are not paid they r still d member of the transferee co.so in dis case Consideration is paid on face value and they get shares in new co. on facevalue of new co.and end result have no effect

Originally posted by : Admire to CA

we calculate Purchase consideration on Market Value in Case of BUsiness Purchase is in the Nature of "Purchase " to have a correct value of Consideration Paid to the shareholders.For eg. Suppose Mr. X have 1000shares face value Rs.10,and Market value of Rs 100.will he ever think of selling it for Rs.10..Ans -no,So The purchase consideration is settled at market value ,

In case of Purchase in the"Nature of Merger" share holders are not paid they r still d member of the transferee co.so in dis case Consideration is paid on face value and they get shares in new co. on facevalue of new co.and end result have no effect

in the question itself they will give whether the purchasing  co. is taking the vendor co.at mv or fv.if the question is silent put suitable assumption/.we have to take market value bcoz it is logic to purchase  a company   according to the current market condition i.e net worth of a co.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
16 June 2026
Sr. Associate / Assistant Manager | TAS / FDD

Boutique Investment Bank & Transaction Advisory Firm

Gurgaon

CA

View Details
Company
ARTICLESHIP 09 June 2026
Article Trainee

Numbertree LLP

Mumbai

CA Inter

View Details
Company
24 May 2026
Accounts & Tax Executive

PARAS KHURANA AND CO

New Delhi

B.Com

View Details
Company
Featured 27 May 2026
Lead Conversion Executive / Sales Closing Executive

SMJ global advisors pvt ltd

New Delhi

B.Com

View Details
Company
23 May 2026
Account Executive

SMJ global advisors pvt ltd

New Delhi

B.Com

View Details
Company
Featured 15 June 2026
Senior Auditor

N. Dhawan & Co

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 27 May 2026
CA Article Trainee

Rahul Dang & Associates-Chartered Accountants

Pune

CA Inter

View Details
Company
22 May 2026
Audit assistant

Displayandbeyond

Mumbai

CA

View Details