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X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is?
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X Ltd acquires the business of Y Ltd whose net assets as per the balan...
Calculation of purchase consideration:
To calculate the purchase consideration, we need to add the amounts agreed to be paid to the equity shareholders, preference shareholders, and debenture holders.
Equity Shareholders: Rs. 3,50,000
Preference Shareholders: Rs. 2,50,000
Debenture Holders: Rs. 2,00,000
Total Purchase Consideration: Rs. 8,00,000
Explanation:
Purchase consideration refers to the total amount agreed to be paid by the acquiring company to the selling company for acquiring its business. In this case, X Ltd has acquired the business of Y Ltd.
To determine the purchase consideration, X Ltd has agreed to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference shareholders, and Rs. 2,00,000 to debenture holders of Y Ltd. These amounts are added to arrive at the total purchase consideration of Rs. 8,00,000.
The net assets of Y Ltd as per the balance sheet are Rs. 5,00,000. However, the purchase consideration is higher than the net assets as X Ltd has paid a premium to acquire the business of Y Ltd.
Acquiring companies pay a premium for various reasons, such as gaining access to new markets, expanding their product or service offerings, or acquiring valuable intellectual property. In this case, X Ltd may have paid a premium to acquire the established business and customer base of Y Ltd.
To calculate the purchase consideration, we need to add the amounts agreed to be paid to the equity shareholders, preference shareholders, and debenture holders.
Equity Shareholders: Rs. 3,50,000
Preference Shareholders: Rs. 2,50,000
Debenture Holders: Rs. 2,00,000
Total Purchase Consideration: Rs. 8,00,000
Explanation:
Purchase consideration refers to the total amount agreed to be paid by the acquiring company to the selling company for acquiring its business. In this case, X Ltd has acquired the business of Y Ltd.
To determine the purchase consideration, X Ltd has agreed to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference shareholders, and Rs. 2,00,000 to debenture holders of Y Ltd. These amounts are added to arrive at the total purchase consideration of Rs. 8,00,000.
The net assets of Y Ltd as per the balance sheet are Rs. 5,00,000. However, the purchase consideration is higher than the net assets as X Ltd has paid a premium to acquire the business of Y Ltd.
Acquiring companies pay a premium for various reasons, such as gaining access to new markets, expanding their product or service offerings, or acquiring valuable intellectual property. In this case, X Ltd may have paid a premium to acquire the established business and customer base of Y Ltd.
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X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is?
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X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is?.
X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is?.
Solutions for X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is? in English & in Hindi are available as part of our courses for B Com.
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X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is?, a detailed solution for X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is? has been provided alongside types of X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs. 5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is? theory, EduRev gives you an
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