20 July 2011
in case of two companies merging in to one another company. why the purchase price of vendor company is divided between two vendor companies in the ratio of actual net assets?
20 July 2011
It is because the value of business is based on the basis of net assed value. Any valuation over and above the nav is goodwill. In case of goodwill, it should also be divided proportionately amongst the companies. Thats why the purchase price is divided into both the companies in the ration of nav.
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