Hi,
My client is going to acquire his proprietership firm in his pvt limited co at book value.. here firm has accumulated loss of 5 Lacs as per latest IT Return, and net assets ( assets - liabiities) are 25 Lacs. Kindly advice me the below quaries
1) what is consideration amount Rs. 25 Lacs or 30 Lacs ie including loss.
2) is valuation of book value or fair value of business is compulsory so simply as per offer letter to firm by pvt. limited co is sufficient as to value of business
3) can we issue the shares at face value to proprietor. pvt limited company is also having losses so fair value of shares shall be below par.
4) in agreement of take over, we can mentioned for the consideration all the asssets and liabilities of firm is taken over along with losses and also same shall be available to pvt limited company to carry forward and claim from its future profits and also would this all tranaction include any tax implications...at consideration of Rs. 25 Lacs or 30 Lacs
Please share your considered views.
Thanks in advance for your help
Best Regards.
CS Siya Singh
CAclubindia
