NO GOODWILL

Acquirer “A” acquires “B” subsidiary’s outstanding shares by issuing 50,000 shares of “A” at INR 1 par value
The market value is INR 50/share for total purchase price of 25,00,000. Assume 25,00,000 purchase is at par as on acquisiti
Pre acquisition

Assets
Acquirer Target
Cash 1800000 600000
Inventory 500000 400000
Plant 9200000 3500000
Depn -2000000 -500000
TOTAL ASSETS 9500000 4000000

Liabilities
Current Liabilities 800000 500000
Other Liabilities 200000
Bonds Payable 1000000
Equity Shareholders Funds an Share Premium 500000
Retained Earnings 8500000 2000000
9500000 4000000
 at INR 1 par value
000 purchase is at par as on acquisition date
NO GOODWILL
Acquirer “A” acquires “B” subsidiary’s outstanding shares by issuing 50,000 shares of “A” at INR 1 par value
The market value is INR 50/share for total purchase price of 25,00,000. Assume 25,00,000 purchase is at par as on acquisiti
Pre acquisition

Assets
Acquirer Target
Cash 1800000 600000
Inventory 500000 400000
Plant 9200000 3500000
Depn -2000000 -500000
TOTAL ASSETS 9500000 4000000

Liabilities
Current Liabilities 800000 500000
Other Liabilities 200000
Bonds Payable 1000000
Equity Shareholders Funds an Share Premium 500000
Retained Earnings 8500000 2000000
9500000 4000000

ASSETS OF TARGET 4000000

LIABILITIES OF TARGET 1500000
BF 2500000

CONSIDERATION 2500000
CHECK WHETHER YOU HAVE GOODWILL

LIABILITIES+CONSIDERATION - ASSETS = GW

4000000 4000000 0
 at INR 1 par value
000 purchase is at par as on acquisition date
Assets
Acquirer Subsidiary Con B/S Post Acq
Cash 1800000 600000 2400000
Inventory 500000 400000 900000
Plant 9200000 3500000 10200000
Depn -2000000 -500000

9500000 4000000 13500000

Liabilities
Current Liabilities 800000 500000 1300000
Other Liabilities 200000 200000
Bonds Payable 1000000 1000000
Equity Shareholders Funds an Share Premium 50000
Retained Earnings 8500000 2450000 11000000
9500000 4000000 13500000

ASSETS 4000000
LIA 1500000
CONSIDERATION 2500000

NO REVLAUTION AND NO GWILL ACQ+TARG = CONSOLIDATION

WITH GOODWILL;PURCHASE PRICE GREATER THAN BOOK VALUE
The acquirer paid INR 45,00,000 to acquire the subsidiary target. It was a 100% acquisition of the shares of the subsidiary.
Acquirer “A” acquires “B” subsidiary’s outstanding shares by issuing 90,000 shares of “A” at INR 1 par value having market val
Pre acquisition

Assets
Acquirer TARGET TARGET Fair Value
Cash 1800000 600000 600000
Inventory 500000 400000 400000
Plant 9200000 3500000 4000000
Depn -2000000 -500000
Patent 500000
Total identifuable Assets 9500000 4000000 5500000

Liabilities
Current Liabilities 800000 500000 500000
Other Liabilities 200000
Bonds Payable 1000000 1000000
Equity Shareholders Funds an Share Premium 50000
Retained Earnings 8500000 2450000
9500000 4000000
hares of the subsidiary.
value having market value of INR 50/share for total purchase price of INR 45,00,000
WITH GOODWILL;PURCHASE PRICE GREATER THAN BOOK VALUE
The acquirer paid INR 45,00,000 to acquire the subsidiary target. It was a 100% acquisition of the shares of the subsidiary.
Acquirer “A” acquires “B” subsidiary’s outstanding shares by issuing 90,000 shares of “A” at INR 1 par value having market val
Pre acquisition

Assets
Acquirer TARGET TARGET Fair Value
Cash 1800000 600000 600000
Inventory 500000 400000 400000
Plant 9200000 3500000 4000000
Depn -2000000 -500000
Patent 500000
Total identifuable Assets 9500000 4000000 5500000

Liabilities
Current Liabilities 800000 500000 500000
Other Liabilities 200000
Bonds Payable 1000000 1000000
Equity Shareholders Funds an Share Premium 50000
Retained Earnings 8500000 2450000
9500000 4000000

Assets 5500000
GWILL 500000
Liabilities 1500000
Consideration 4500000
hares of the subsidiary.
value having market value of INR 50/share for total purchase price of INR 45,00,000

GWILL

ASSETS 5500000
GWILL 500000

LIABILITIES 1500000
CONSIDEATION 4500000
Assets
Acquirer TARGET - BV Con B/S Post Acq REVALUED TARGET BS
Cash 1800000 600000 2400000 600000
Inventory 500000 400000 900000 400000
Plant 9200000 3500000 11200000 4000000
Depn -2000000 -500000
Patent 500000 500000
Goodwill 500000 5500000
9500000 4000000 15500000

Liabilities 500000
Current Liabilities 800000 500000 1300000
Other Liabilities 200000 200000 1000000
Bonds Payable 1000000 1000000
Equity Shareholders Funds 2000000 50000
Retained Earnings 6500000 2450000 13000000 ACQ RE+E
9500000 4000000 15500000

45000000

BV NO GILL ACQ RE+EQUITY SH FUNDS+CONSIDERATION

MV-GWILL
LUED TARGET BS

Assets 5500000
GWILL 500000
Liabilities 1500000
Consideration 4500000

Y SH FUNDS+CONSIDERATION
An acquirer Tata Confidence Ltd. acquires Coriuos Ltd. The target firm Corious Ltd. has the following assets and liabilities as sh
there is brand equity of the target due to its popular brands selling in the market. Then an unrecorded warranty liability also e
CONSIDERATION IS 400,000 shares of Rs 50 each
BS OF TARGET -CORIOUS LTD
ASSETS
Cash 1800000
Inventory 1400000
Land 2800000
Building 4500000
Property 3500000
14000000
LIABILITIES
Current Liabilities 6500000
12% Bond 1600000
Common stock 500000
Share premium 4500000
Retained Earnings 900000
14000000

FAIR VALUE
Cash BV 1800000
Inventory MV 1450000
Land MV 3500000
Building MV 5500000
Property MV 5000000
Brand Equity 6250000
TA 23500000

Current Liabilities BV 6500000

12% Bond BV 1600000
Premium on bonds payable MV 400000
Warranty Laibility Estimate 4500000

Show how these numbers will appear in the consolidated BS of the acquirer aftre acqusition
 Ltd. has the following assets and liabilities as shown
ket. Then an unrecorded warranty liability also exists.

aftre acqusition
FAIR VALUE
Cash BV 1800000
Inventory MV 1450000
Land MV 3500000
Building MV 5500000
Property MV 5000000
Brand Equity 6250000
Goodwill 9500000
TA 33000000

Current Liabilities BV 6500000

12% Bond BV 1600000
Premium on bonds payable MV 400000
Warranty Laibility Estimate 4500000
Common stock 400000
share premium 19600000
33000000
IDENTIFIAB 23500000
GW 9500000
LIABILITIES 13000000
CONSIDERATION 20000000
If consideration was 150,000 shares at 50 per share

FAIR VALUE
Cash BV 1800000
Inventory MV 1450000
Land MV 3500000
Building MV 5500000
Property MV 5000000
Brand Equity 6250000

TA 23500000

Current Liabilities BV 6500000

12% Bond BV 1600000
Premium on bonds payable MV 400000
Warranty Laibility Estimate 4500000
Common stock 150000
share premium 7350000
Gain on goodwill purchase 3000000
20500000

PROFIT - P&L -LIABILITIES SIDE

ASSETS

POSITIVE AMOUNT "+VE

NEGATIVE -CLEAR HEAD DEDUCT IT "-VE

DEPN FA
EQ SHAREHOLDER POV
GWILL +VE ASSETS 500000 7000000
NEGATIVE GWILL LIABILITIES 1000000 -1000000
6000000
IDENTIFIABLE ASSET 23500000

LIABILITIES 13000000
CONSIDERATION 7500000
gain on gw purchase -3000000

LIABILITIES+CONSIDERATION >ASSETS GWILL

LIABILITIES+CONSIDERATION =ASSETS 0
LIABILITIES+CONSIDERATION <ASSETS

ACQ EQ SHAREHOLDER POV

 42 shares of HDFC Bank for 25 shares of HDFC Ltd
Ratio 1.68 1

Suppose you have 85 shares of HDFC ltd

Let us assume that you bought these shares at 1200 per share on 1.1.2020

You will get

142.80 85/25*42

Since there is no concept of fractional share issue,you will get

Let us assume the shares of HDFC bank are listed at 1700 per share on 17th July 2023

You decide to sell 100 shares on 31st July 2023 at 1800 per share

sale value 180000

purchase price 71429

LTCG 108571 10% hdfc bank-hdfc ltd

CASH CONSIDERATION

LTCG 1360.0
pur price 571.42857
ltcg 788.6 17th july 2023
 85 shares in HDFC Ltd part equity owner of HDFC LTD

HDFC Bank Ltd

142

0.8 cash

17th July 2023 no tax

sell shares - subject to tax

85 142.8
100
102000 1200*85 142.8
71429
notice-HDFC Ltd
HDFC Bank

valuation report - exchange ratio

financial details

voting - date

75% - HDFC Ltd - ok merger

hdfc bank