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AMALGAMATION (SELLING COMPANY HOLDING SHARES IN PURCHASING COMPANY)

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AMALGAMATION INTER COMPANY HOLDINGS Intercompany holdings are divided into three types Purchasing company holding shares in selling company Selling company holding shares in purchasing company Purchasing company and selling company hold shares in each other Selling company holding shares in purchasing company Let us assume the assets of selling company (excluding inter company investment)=Rs.1600000/- Share capital of selling company = 100000 Fair value of purchasing company shares= Rs.10/- Issue price of purchasing company shares= Rs.20/- Share exchange ratio= 1 share for each share of selling company Computation of purchase consideration Payments method: Step:1 Calculate number of shares to be issued by purchasing company to selling company Exchange ratio= 1:1 Existing total shares of selling company = 100000 so total number of shares issued by purchasing company will be 100000shares Step:2 Deduct number of shares already held b