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Urgent Please

Pankaj Arora (Learner) (3134 Points)

22 December 2010

Dear All

Please let me know the takeover of company rules how to transfer assets and liabilities in transferor company. Suppose ABC Co. have following assets and liabilities and now BPL is going to takeover of ABC Co. than what amount will BPL pay to ABC Co for takeover. because assets = liabilities?

Could you please tell me any method for calculation

Share Capital – 6000 Fixed Assets – 5000

Loans & Liability – 1500 Current Assets - 8000

Current Liability – 5500

--------------------- -------------------

13000.00 13000.00

---------------------- ---------------------

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21 Replies

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 22 December 2010

Net Asset Method can be adopted for that number of equity shares needed i.e Fixed Assets +current assets-current liabilities-loans/Noof Equity Shares

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Pankaj Arora (Learner) (3134 Points)
Replied 22 December 2010

Do you have notes on takeover or acquisition?

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 22 December 2010

Pankaj you can down load notes from this club itself Notes on Amalgamation,Absorption and Reconstuction this topic is for both at ipcc Level and Final level

CA CS CIMA Prakash Somani (Landmark Group) (23502 Points)
Replied 22 December 2010

13000-1500-5500 = 6000 is the net asset value and value per share will be 6000/ no. of eq shares

Pankaj Arora (Learner) (3134 Points)
Replied 22 December 2010

6000 no. of shares suppose face value of a share is Rs.10 each so abc co. will get rs.60000 from BPL?

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sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 22 December 2010

Actually No of Shares BPL has should be the denominator and Numerator should be 6000 which is the netassets of ABC to ascertain Intrinsic value per share of ABC .Others please correct me if i am wrong

Pankaj Arora (Learner) (3134 Points)
Replied 22 December 2010

Sorry actually I have not clear this concept but could you please tell me that what amount abc co. will receive from bpl?

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 22 December 2010

It seems I am correct in my explanation prakash will explain in detail other queries for you in this regard

Pankaj Arora (Learner) (3134 Points)
Replied 22 December 2010

Why? You don’t know..

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 22 December 2010

I accept i dont have much knowledge compared to prakash so any further queries please ask him he is a CA,ACS and he is a helping hand please do ask him

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 22 December 2010

as per book entry only share capital FV is receivable.

any premium adjustment on face value depends on the market value, not the book value,

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 22 December 2010

Originally posted by : pankaj
	Dear All Please let me know the takeover of company rules how to transfer assets and liabilities in transferor company. Suppose ABC Co. have following assets and liabilities and now BPL is going to takeover of ABC Co. than what amount will BPL pay to ABC Co for takeover. because assets = liabilities? Could you please tell me any method for calculation Share Capital – 6000 Fixed Assets – 5000 Loans & Liability – 1500 Current Assets - 8000 Current Liability – 5500 --------------------- ------------------- 13000.00 13000.00 ---------------------- ---------------------

suppose ...........(good joke ...........keep it up)
suppose- nobody is interested to buy your company and u have to dispose it ar zero cost , to avoid the paperwork ...............in that case u have to pay the buyer some money to get rid of it :)
the transaction is between TWO, and its not quoted on exchange, so only book entry can be reflected here, any premium (positiv e or negetive) is to be settled between the two parties ..........

Dheeraj (Learner) (1100 Points)
Replied 22 December 2010

this is the case of absorption, and u can easily find it in ca-inter books (Amalgamation Chapter) i.e the accounting treatment

u have two options either take over the co at market value or by net asset method by paying purchase consideration amount to shareholders of ABC co. or by issuing shares of bpl co.

it is better for u to get the notes of ca-inter to resolve ur query.

Regards

Dheeraj