CORPORATE ACCONTS | ACCOUNTING | NTA UGC NET COMMERCE
Dec 2019
Which of the following is not a method for calculating or ascertaining the amount of purchase consideration?
- Net payment method
- Net asset method
- Gross receipt method
- Share exchange method
ANS :-
(c) Gross receipt method
Purchase Consideration refers to the consideration payable by the purchasing company to the vendor company for taking over the assets and liabilities of Vendor Company.Accounting Standard – 14 defines the term purchase consideration as the “aggregate of the shares and other securities issued and the payment made in the form of cach or other assets by the transferee company to the shareholders of the transferor company.
The amount of purchase consideration can be computed under any of the following four methods:-
- Lump Sum Method
- Net Worth or Net Assets Method
- Net Payment Method
- Intrinsic Value Method (Shares Exchange Method).
