Bookkeeping Suggestions Valuations Offer Trade Proportion.


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2. Bookkeeping Implications. Bookkeeping Standard 14- - Pooling of interest technique Purchase system . 3. Bookkeeping suggestions. Amalgamation
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Slide 1

Bookkeeping Implications Valuations Share Exchange Ratio

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Accounting Implications Accounting Standard 14- -Pooling of premium strategy -Purchase technique

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Accounting implications Amalgamation – Accounting - conflict of bookkeeping approaches - uniform set of bookkeeping strategies - Change in bookkeeping arrangements reported as per AS-5

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Accounting suggestions Treatment of Reserves -merger bookkeeping - identity of Reserves -buy bookkeeping - net resources esteem – thought = save (Statutory store to be preserved) -Treatment of goodwill -ramifications of AS-26 Intangible resource -Balance in Profit & Loss A/c

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Accounting Implications Disclosure (a) particulars of amalgamating organizations (b) compelling date of amalgamation for bookkeeping reason (c) technique for bookkeeping (pooling versus buy) (d) particulars of the Scheme (e) depiction and number of shares issued (f) trade (g) treatment of distinction

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Valuation and assurance of Share Exchange proportion Valuations -CA Valuations -Merchants Bankers Review -No two valuations are prone to be indistinguishable -decency -a matter of conclusion

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Valuations Book esteem technique – net resources technique Market esteem strategy Profit winning limit strategy OR return strategy future viable benefits DCF technique Appropriate weightage Average of the three techniques

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Valuations Who can protest Valuation Members Creditors ROC Employees

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Share Ratio Share Exchange Ratio -on account of amalgamation Share qualification Ratio -on account of demerger/course of action Reduction of offer face esteem in transferor Co. what\'s more, issue of shares for the decreased quality in transferee co.

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Share Ratio Court not to meddle with offer trade proportion Public premium Movement in business sector cost amid the mediating time frame not material Share trade on account of holding and backup co amalgamation Extinguishment of intercompany shareholding Trust holding Method of valuation and resultant offer proportion to be said in illustrative explanation

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Share Ratio No need that value to be traded for value Equity can be traded for inclination offers as alternative to shareholders Shares to be live amid the interceding time frame from delegated date to record date (after successful date)

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Demerger No particular bookkeeping standard AS 14 all things considered applies Valuation on the premise of identifiable business Share privilege proportion Shares of demerging Co. not to be smothered

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Amalgamation Accounting – an Illustration Hind lever Chemicals Ltd. (HLC) with Tata Chemicals Ltd (TCL) HLC – mass chemicals & composts TCL - Chemicals & manures Scheme agent from 01-April-02 Bombay High Court endorsed TCL plan on 14-Oct-03 Punjab & Haryana High Court authorized HLC plan on 19-May04 Effect given in 2003-04 records of TCL

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Illustration - Merger of HLC with TCL Notes to the Balance Sheet & P&L record of TCL 31.03.04 6) Scheme of Amalgamation (a) comprehension of HLC has been exchanged to and vested into TCL reflectively from 1 st April 2002 (the designated date). The Scheme has been offered effect to in these records. The compelling date of amalgamation is 01-06-04 (b) the operations of HCL incorporate assembling and trading in composts and Bulk Chemicals (c) pooling of premiums –method as endorsed by AS 14

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Illustration - Merger of HLC with TCL Rs Cr Rs Cr Fixed Assets 166.33 Investments 3.43 Net Current Assets 217.84 Total Assets 387.60 Less Loans 62.46 Deferred charge liability 21.36 ( 83.82) 303.78

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Illustration - Merger of HLC with TCL 303.78 Issue of shares 34464000 Equity Shares 34.46 in the proportion of TCL for each two HLC Transfer of Share premium HLC to Share premium 162.73 Transfer of CRR of HLC to CRR 0.10 Transfer of Capital Reserve of HLC to Capital Reserve - Transfer of P&L A/C of HLC to P&L A/C 45.30 209.13 Balance exchanged to General Reserve 60.19

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Illustration - Merger of HLC with TCL Shares to be issued to HLC shareholders by TCL qualified for profit pronounced by TCL P%L Appropriation A/C of TCL to incorporate profit on shares pending portion to HLC shareholders Income and costs amid the period 01-04-02 to 31-03-03 consolidated in the Accounts 2003-04 as HLC carried on the current business in "trust" for TCL All vouchers archives for the period are for the sake of HLC

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Illustration - Merger of HLC with TCL P&L A/C 31.03.2004 Rs Cr 31.03.04 31.03.03 Profit after tax 220.53 196.58 Balance presented 365.03 300.53 Amount exchanged on amalgamation of HLC: Balance in P&L A/C 01.04.02 45.30 Profit after assessment for 2002-03 30.03 75.33 Dividend (18.96) Tax on profit (2.43) Transfer to General Reserve (5.00) 48.94 Amount accessible for appropriation 634.50 497.11

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Illustration - Merger of HLC with TCL Valuation valuation did and prescribed by N.M. Raiji & Co. CA s and Delloitte Haskins & Sells CA s Board of Directors on the premise of their autonomous valuation and judgment acknowledges the proposal Share Exchange Ratio Shareholders of HLC (transferor Co.) qualified to get 5 (five) completely paid up value shares of Rs 10 each of TCL (transferee Co.) in admiration of each 2 (two) value shares of the face estimation of 10 each held in HLC Share trade to occur on a reasonable record date

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