please try to solve my query as iam facing problem in it.
why in case of amalgamation (either in nature of purchase or merger) when purchase consideration is more than equity share capital of transferror company then we subtract excess from general reserve? also explain me why it is actually subtracted equity share capital also.
Purchase Consideration is something given to the shareholders in return for acquiring their existing position in the co..
So The right of the shareholders mainly goes with the shares they are holding in the co. represented by their equity capital...
Reserves are the profits earned by the co. transfered to the shareholder's funds,
So, the pc is adjusted in net with the Shareholder's funds....
Hope i gave some clear exp..
Arpan Bohra & Co
Hyderabad
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