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Business Combination No.1

Audio: Please use headphone for clarity. Business Combination No.1. D.V.Ramana ramana@ximb.ac.in. Relevant Accounting Standard. IFRS-3: Business Combination IndAS-3: Business Combination AS-14:Amalgamation. Purchase Consideration. Determination of Purchase Assets based

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Business Combination No.1

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  1. Audio: Please use headphone for clarity Business CombinationNo.1 D.V.Ramana ramana@ximb.ac.in

  2. Relevant Accounting Standard • IFRS-3: Business Combination • IndAS-3: Business Combination • AS-14:Amalgamation

  3. Purchase Consideration • Determination of Purchase • Assets based • PC = Assets - Liabilities • Earning based • PC = PV of FCF • Market price based • PC = Shares Acquired * MP of shares

  4. Purchase Consideration • Discharge • Cash • Shares • Bonds and Debentures • Combination of above

  5. Standalone Balance Sheet • Asset Side • Shares acquired will appear as investment • Reduction in Cash (if paid by cash) • Sources side (depending on the mode of payment) • Increase in capital • Shares Premium • Bonds or Debentures

  6. A acquires 480 shares for 15000 Discharged by payment of cash

  7. A acquires 480 shares for 15000 Discharged issue of shares of 5 at Rs.50

  8. Consolidated Balance Sheet (CBS) • CBS is required if the company acquires control on another company • CBS will show the assets and liabilities of the buyer and seller • CBS shows the financial position of the reporting entity

  9. Consolidated Balance Sheet • Good will • Purchase Consideration • Less • Proportionate Equity Acquired • Minority Interest • Total Equity of the seller • Less • Majority Equity Acquired

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