A Ltd. acquires B Ltd., on 1st April, 2024 and discharges consideration for the business as follows: Issued 21,000 fully paid equity shares of ₹ 10 each at par to the equity shareholders of B Ltd. Issued fully paid up 15
CS Professional · Corporate Restructuring, Insolvency, Liquidation & Winding-up · PYQS · December 2024
A Ltd. acquires B Ltd., on 1st April, 2024 and discharges consideration for the business as follows: Issued 21,000 fully paid equity shares of ₹ 10 each at par to the equity shareholders of B Ltd. Issued fully paid up 15% preference shares of ₹ 100 each to discharge the preference (₹ 2,00,000) of B Ltd. at a premium of 10%. It is agreed that the debentures of B Ltd. (₹ 75,000) will be converted into equal number and amount of 13% debentures of A Ltd. Calculate the amount of purchase consideration.
Answer & Explanation:
Calculation of purchase consideration Consideration for equity shareholders: 21,000 equity shares * ₹ 10 = ₹ 2,10,000 Consideration for preference shareholders: Preference shares of ₹ 2,00,000 at a premium of 10% = ₹ 2,00,000 * 1.10 = ₹ 2,20,000 Total Purchase Consideration = ₹ 2,10,000 + ₹ 2,20,000 = ₹ 4,30,000 Note: The conversion of debentures of B Ltd. into debentures of A Ltd. is not included in the purchase consideration as it is a payment to debenture holders, not to the shareholders of B Ltd. for their shares.
Topics: Mergers and Acquisitions
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