Sorry, another maybe obvious question

Sorry, another maybe obvious question

Didn't find your answer?

The shareholders of company A have set up company B

They are issuing share capital in company B and it is being paid for by an investment in company A

I believe the investment should be shown in the accounts at the actual transferred value

However, B is a Plc

A is an overseas company

A has been valued considerably higher than the transfer value

Therefore clients want B to reflect actual value, rather than transfer value

Please help

Replies (3)

Please login or register to join the discussion.

By johngroganjga
14th Nov 2013 08:37

What establishes the "transfer value" and why is this the "actual" value?

Thanks (0)
avatar
By occca
14th Nov 2013 18:48

Thanks again John

The value of company A is fact and has been audited in their own country

 

Therefore client is saying if 70% is transferred in, then the actual value is 70% of valuation of A, not actual share capital received in return

Thanks (0)
By johngroganjga
14th Nov 2013 20:00

Presumably by "actual value" you mean the nominal value of the shares issued.

The issue of shares should be accounted for at the full value of the consideration received for their issue. The excess of that value over the nominal value of the shares should be credited to share premium.

Thanks (1)