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How to value a unit?

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Ch.Sree Rama Chandra Murthy

Manager Internal Audit

32 Points Posted on 13 January 2012

Respected members,

one of my clients,a sole proprietoy concern having 2 business units.Now they were started a new company in which the proprietor and his family members are the directors and share holders.Now the same co. wants to acquire one of the units in such proprietory concern.

how i need to approach for this issue,pls provide your valuble advices in this regard.

Replies (1)

sivaram

Asst Mgr-Taxation

5764 Points Posted on 13 January 2012

we study in our curriculum one company acquiring another company thereby acquired company is liquidated and the assets and purchase consderation given is recorded in the books of acquiring company

here the acquired business is propritory concern cant say whether it can be done on same lines.the thing is all net assets be recorded at agreed values and purchae consideration is recorded and the difference between the net assets taken over and purchase consideration is recorded as Goodwill or capital reserve as the case may be

AS-14 applicable in case acquired concern is a company here it is propritor ship so please wait for other expert opinion