If company A purchased 100% of company B, how would you deal with the aquisition accounting on the share cap and reserves side?
Share capital of B £70
Capital redemption reserve £37
P&L reserves £37,166
Would these be represented in the entity acocunts of newly acquired company B and then reversed out at consolidation?
Replies (1)
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Presuming A is buying shares in B
In A's accounts
Dr Price paid for shares to Investment in sub
Cr Price paid to Bank
Consider impairment post purchase in A
In B no accounting entries
Upon consolidation consider what adjustments required within AB Group re underlying assets in B upon acquisition, as is normally the case upon consolidation.
Take a look at this thread-
https://www.accountingweb.co.uk/any-answers/acquisition-accountinggoodwill