{"id":2596,"date":"2019-10-14T10:32:16","date_gmt":"2019-10-14T10:32:16","guid":{"rendered":"https:\/\/commerceiets.com\/?p=2596"},"modified":"2019-10-14T10:32:16","modified_gmt":"2019-10-14T10:32:16","slug":"purchase-consideration","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/purchase-consideration\/","title":{"rendered":"PURCHASE CONSIDERATION"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/purchase-consideration\/#PURCHASE_CONSIDERATION\" title=\"PURCHASE\nCONSIDERATION\">PURCHASE\nCONSIDERATION<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/purchase-consideration\/#METHODS_OF_CALCULATING_PURCHASE_CONSIDERATION\" title=\"METHODS\nOF CALCULATING PURCHASE CONSIDERATION\">METHODS\nOF CALCULATING PURCHASE CONSIDERATION<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/purchase-consideration\/#LUMP-SUM_PAYMENT_METHOD\" title=\"LUMP-SUM PAYMENT METHOD\">LUMP-SUM PAYMENT METHOD<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/purchase-consideration\/#NET_PAYMENT_METHOD_OF_PURCHASE_CONSIDERATION\" title=\"NET PAYMENT METHOD OF PURCHASE CONSIDERATION\">NET PAYMENT METHOD OF PURCHASE CONSIDERATION<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/purchase-consideration\/#NET_ASSETS_OR_NET_WORTH_METHOD\" title=\"NET ASSETS OR NET WORTH METHOD\">NET ASSETS OR NET WORTH METHOD<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/commerceiets.com\/purchase-consideration\/#ON_THE_BASIS_OF_VALUE_OF_SHARES_EXCHANGED\" title=\"ON THE BASIS OF VALUE OF SHARES EXCHANGED\">ON THE BASIS OF VALUE OF SHARES EXCHANGED<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"PURCHASE_CONSIDERATION\"><\/span>PURCHASE\nCONSIDERATION<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">Purchase Consideration refers to the payment made by the transferee company to the transferor company for the business taken over. It includes all types of payments made in the form of the shares, securities, bonds or cash etc.<\/p>\n\n\n\n<p class=\"has-pale-cyan-blue-background-color has-background has-medium-font-size\"><strong>ACCORDING TO\nACCOUNTING STANDARD 14<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">\u201cThe aggregate of shares and other securities issued and the\npayment made in the form of cash or other assets by the transferee company to\nthe shareholders of the transferor company.\u201d <\/p>\n\n\n\n<p class=\"has-medium-font-size\">The purchase consideration does not include payment to\ndebenture holders or any other outside liabilities which are taken over and\ndischarged by Transferee Company.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">It depends upon the fair value of securities and assets. The fair value of securities is fixed by the authorities and the fair value of assets is considered on the basis of their book value and on market value, if provided. <\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"METHODS_OF_CALCULATING_PURCHASE_CONSIDERATION\"><\/span><strong>METHODS\nOF CALCULATING PURCHASE CONSIDERATION<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"has-medium-font-size\">The various methods for calculating purchase considerations are:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"LUMP-SUM_PAYMENT_METHOD\"><\/span>LUMP-SUM PAYMENT METHOD<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"has-medium-font-size\">In case of this method, there is no calculation regarding\nthe amount paid by the transferee company to the transferor company. The whole\namount paid by the transferee company is considered as purchase consideration.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>EXAMPLE:<\/strong> X Ltd. take over the business of the Y Ltd. and agreed to pay Rs. 45,00,000. The amount so agreed to pay is the purchase consideration.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NET_PAYMENT_METHOD_OF_PURCHASE_CONSIDERATION\"><\/span>NET PAYMENT METHOD OF PURCHASE CONSIDERATION<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"has-medium-font-size\">Accounting Standard 14 recognizes the Net payment method for the calculation of purchase considerations. This method is used when the payment of the purchase considerations is made in the form of the securities or cash. As per this method, the payments to the debenture holders are not included in the purchase considerations. It is assumed that the <a href=\"https:\/\/commerceiets.com\/debentures\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"debentures (opens in a new tab)\">debentures<\/a> alike liabilities are taken over and repaid by the transferee company.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>EXAMPLE: <\/strong>X Ltd. agreed to take over the business of the Y Ltd. the liabilities of Y Ltd. includes Rs. 5,00,000 debentures. The Y Ltd. has capital divided into 2,000 shares of Rs. 10 each. X Ltd agreed to pay by issuing 1,000 shares of Rs. 15 each and the balance by cash. The purchase consideration will be calculated as follows:<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Shares issued<\/strong>&nbsp;&nbsp;&nbsp; : 1,000*15= 15,000<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Cash paid<\/strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; :5,000<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Total<\/strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; :20,000<\/p>\n\n\n\n<p class=\"has-medium-font-size\">The purchase consideration does not include the amount to be\npaid to the debentureholders by the transferee company.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NET_ASSETS_OR_NET_WORTH_METHOD\"><\/span>NET ASSETS OR NET WORTH METHOD<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"has-medium-font-size\">As per this method, the purchase consideration is calculated\nby finding out the difference between the assets and liabilities of the\ncompany. The sum of liabilities is deducted out of the sum of assets to find\nout the purchase consideration. <\/p>\n\n\n\n<p class=\"has-medium-font-size\">Under this method:<\/p>\n\n\n\n<ul><li>All the assets agreed to be taken over by the\ntransferee company includes the cash and bank balances.<\/li><li>The assets like goodwill and prepaid expenses\nare also included in the assets to be taken over by the transferee company.<\/li><li>The liabilities taken over by the transferee\ncompany includes all third party liabilities.<\/li><li>The accumulated profits and reserves never form\nthe part of the purchase consideration.<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\"><strong>EXAMPLE: <\/strong>X Ltd. agrees to take over the Y Ltd. which has following assets and liabilities:<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Fixed assets: 6,50,000; Current Assets: 1,40,000; Goodwill:\n10,000; Debentures: 1,00,000; Current Liabilities: 1,00,000.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">As per this method, the purchase considerations will be calculated as follows:<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Fixed Assets&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; :6,50,000<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Current Assets&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; :1,40,000<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Goodwill&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; :10,000<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Less:<\/strong> Debentures&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; :(1,00,000)<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Less:<\/strong> Current Liabilities&nbsp; :(1,00,000)<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Purchase Considerations<\/strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; :6,00,000<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"ON_THE_BASIS_OF_VALUE_OF_SHARES_EXCHANGED\"><\/span>ON THE BASIS OF VALUE OF SHARES EXCHANGED<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"has-medium-font-size\">Under this method, purchase consideration is calculated on\nthe basis of the value of shares of the two companies involved.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>EXAMPLE:<\/strong> The Y Ltd. has Rs. 20,000 share capital. X Ltd. wants to take over the business of Y Ltd. by paying shares of Rs. 20 each. The purchase consideration will be calculated by calculating the number of shares to be issued.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">20,000\/20=1,000 shares.<\/p>\n\n\n\n<p class=\"has-black-color has-text-color has-huge-font-size\">ACCOUNTING TREATMENT OF PURCHASE CONSIDERATION<\/p>\n\n\n\n<p>The accounting treatment is studied in two parts:<\/p>\n\n\n\n<p>In books of Transferor (Vendor) Company<\/p>\n\n\n\n<p>In books of Transferee (Purchasing) Company<\/p>\n\n\n\n<p class=\"has-black-color has-text-color has-larger-font-size\">IN THE BOOKS OF TRANSFEROR COMPANY<\/p>\n\n\n\n<p>FOR TRANSFER OF ALL ASSETS<\/p>\n\n\n\n<p>Realisation Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>          To Sundry Assets Account<\/p>\n\n\n\n<p>FOR TRANSFER OF LIABILITES TAKEN OVER<\/p>\n\n\n\n<p>Sundry Liabilities Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;Dr.<\/p>\n\n\n\n<p>          To Realisation Account<\/p>\n\n\n\n<p>FOR PURCHASE CONSIDERATION DUE<\/p>\n\n\n\n<p>Transferee Company&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>          To Realisation Account<\/p>\n\n\n\n<p>FOR RECIEPT OF PURCHASE CONSIDERATION<\/p>\n\n\n\n<p>Shares in the Transferee Company Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>Debentures in the Transferee Company Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>Bank Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>          To Transferee Company<\/p>\n\n\n\n<p>FOR SALE OF ASSETS NOT TAKEN OVER BY THE TRANSFEREE COMPANY<\/p>\n\n\n\n<p>Bank Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;..Dr.<\/p>\n\n\n\n<p>          To Realisation Account<\/p>\n\n\n\n<p>FOR PAYMENT OF LIABILITIES NOT TAKEN OVER BY THE TRANSFEREE COMPANY<\/p>\n\n\n\n<p>Sundry Liabilities&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>          To Bank\/ shares in transferee company<\/p>\n\n\n\n<p>FOR MONEY DUE TO PREFERENCE SHAREHOLDERS<\/p>\n\n\n\n<p>Preference Share Capital Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>          To Preference Shareholders Account<\/p>\n\n\n\n<p>FOR PAYMENT TO PREFERENCE SHAREHOLDERS&#8217;<\/p>\n\n\n\n<p>Preference Shareholders Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;Dr.<\/p>\n\n\n\n<p>          To Bank\/ Shares in the transferee company<\/p>\n\n\n\n<p>FOR PROFIT ON REALISATION<\/p>\n\n\n\n<p>Realisation Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;Dr.<\/p>\n\n\n\n<p>          To Equity Shareholders Account<\/p>\n\n\n\n<p>FOR LOSS ONREALISATION<\/p>\n\n\n\n<p>Equity Shareholders Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;Dr.<\/p>\n\n\n\n<p>          To Realisation Account<\/p>\n\n\n\n<p>FOR TRANSFER OF EQUITY SHARE CAPITAL, RESERVES, ETC.<\/p>\n\n\n\n<p>Equity share capital Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>General Reserve Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;..Dr.<\/p>\n\n\n\n<p>Accumulated Profits Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>          To Equity Shareholders Account<\/p>\n\n\n\n<p>FOR PAYMENT TO EQUITY SHAREHOLDERS<\/p>\n\n\n\n<p>Equity Shareholders Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>          To Shares in Transferee Company<\/p>\n\n\n\n<p>          To Bank Account<\/p>\n\n\n\n<p class=\"has-black-color has-text-color has-larger-font-size\">IN THE BOOKS OF TRANSFEREE COMPANY<\/p>\n\n\n\n<p>The transferee company records transactions by Pooling of Interests Method and Purchase Method.<\/p>\n\n\n\n<p class=\"has-black-color has-text-color\" style=\"font-size:22px\">AS PER POOLING OF INTERESTS METHOD<\/p>\n\n\n\n<p>PURCHASE CONSIDERATION DUE<\/p>\n\n\n\n<p>Business Purchase Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;Dr.<\/p>\n\n\n\n<p>          To Liquidators of Transferor Company<\/p>\n\n\n\n<p>ACQUISITION OF ASSETS AND LIABILITIES OF THE TRANSFEROR COMPANY<\/p>\n\n\n\n<p>Sundry Assets Accounts&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;Dr.<\/p>\n\n\n\n<p>          To Sundry Liabilities Account<\/p>\n\n\n\n<p>          To Statement of Profit and Loss Account<\/p>\n\n\n\n<p>          To Reserve Accounts<\/p>\n\n\n\n<p>          To Reserves Accounts<\/p>\n\n\n\n<p>          To Business Purchase Account<\/p>\n\n\n\n<p>PAYMENT OF PURCHASE<\/p>\n\n\n\n<p>Liquidators of Transferor Company Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;Dr.<\/p>\n\n\n\n<p>          To Share Capital Account<\/p>\n\n\n\n<p>          To Debentures Account<\/p>\n\n\n\n<p>          To Bank Account<\/p>\n\n\n\n<p>LIQUIDATION EXPENSES OF TRANSFEROR COMPANY BORNE BY TRANSFEREE COMPANY<\/p>\n\n\n\n<p>Statement of Profit and Loss\/ Reserve Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>          To Bank Account<\/p>\n\n\n\n<p>FORMATION EXPENSES OF THE TRANSFEREE COMPANY IF NEW COMPANY IS FORMED<\/p>\n\n\n\n<p>Preliminary Expenses Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;Dr.<\/p>\n\n\n\n<p>          To Bank Account<\/p>\n\n\n\n<p class=\"has-black-color has-text-color\" style=\"font-size:22px\"> AS PER PURCHASE METHOD<\/p>\n\n\n\n<p>FOR PURCHASE OF BUSINESS<\/p>\n\n\n\n<p>Business Purchase Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;Dr.<\/p>\n\n\n\n<p>          To Liquidators of Transferor company account<\/p>\n\n\n\n<p>FOR ASSETS AND LIABILITIES TAKEN OVER<\/p>\n\n\n\n<p>Asset Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;..DR.<\/p>\n\n\n\n<p>          To Liabilities Account<\/p>\n\n\n\n<p>          To Business Purchase Account<\/p>\n\n\n\n<p>FOR PAYMENT OF PURCHASE CONSIDERATION<\/p>\n\n\n\n<p>Liquidators of transferor company Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;..Dr.<\/p>\n\n\n\n<p>          To Share Capital Account<\/p>\n\n\n\n<p>          To Securities Premium Account<\/p>\n\n\n\n<p>          To Debentures Account<\/p>\n\n\n\n<p>          To Bank Account<\/p>\n\n\n\n<p>WHEN RESERVES ARE MAINTAINED<\/p>\n\n\n\n<p>Amalgamation Adjustment Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;..Dr.<\/p>\n\n\n\n<p>          To statutory reserves account<\/p>\n\n\n\n<p>FOR LIQUIDATION EXPENSES<\/p>\n\n\n\n<p>Goodwill\/ Capital reserve Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.Dr.<\/p>\n\n\n\n<p>          To Bank Account<\/p>\n\n\n\n<p>FORMATION EXPENSES OF NEW COMPANY<\/p>\n\n\n\n<p>Preliminary Expenses Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;Dr.<\/p>\n\n\n\n<p>          To Bank Account<\/p>\n\n\n\n<p>PAYMENT OF LIABILITY OF TRANSFEROR COMPANY<\/p>\n\n\n\n<p>Liability Account&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;..Dr.<\/p>\n\n\n\n<p>          To share capital account<\/p>\n\n\n\n<p>          To debentures account<\/p>\n\n\n\n<p>          To bank account<\/p>\n\n\n\n<p><strong>JOIN THE CHANNEL ON TELEGRAM<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/t.me\/commerceiets\" target=\"_blank\">https:\/\/t.me\/commerceiets<\/a><\/p>\n\n\n\n<p><strong>CONNECT ON LINKEDIN<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noopener\">https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>PURCHASE CONSIDERATION Purchase Consideration refers to the payment made by the transferee company to the transferor company for the business taken over. It includes all types of payments made in the form of the shares, securities, bonds or cash etc. ACCORDING TO ACCOUNTING STANDARD 14 \u201cThe aggregate of shares and other securities issued and the&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/purchase-consideration\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;PURCHASE CONSIDERATION&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":2597,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[102],"tags":[],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/2596"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=2596"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/2596\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/2597"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=2596"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=2596"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=2596"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}