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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 by the selling company from the total shares issued by purchasing compa…