Hi All,
This query is from book "first lessons in FInancial reporting" from MP Vijaykumar.Problem 20.
In this problem, in question it is given--" The preference shareholders and Debenture holders are to be satisfied by issue of similar instruments in amalgamated(Purchasing) company.In solution, Preference dividend and Debenture interest from Subsidiary company(amalgamating/selling company) is considered as revenue for Purchasing company.
Can anyone please explain how this will be a revenue for purchasing company. As per my understanding, now since Purchasing company is issuing Preference shares and debentures, they should be paying dividend and interest in place of selling company.So it should be an expense,not revenue.
I have been struggling with this concept for many days now. I will be very thankful if you can help me with this.
CAclubindia
