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1) When parent company is exchanging shares in consideration for acquiring subsidiary company we are crediting share capital and share premium account, is that because the parent company is issuing new shares??
2) If a contingent liability to be paid is less than the actual consideration, it is to be credited in group retained earnings calculation and credited to P&L account, is that right or should it come in only in GRE or P&L?
Thanks in advance, you are helping me a lot…
Hi,
Glad to hear that we’re helping you a lot.
1) Yes, the shares are being issued by the parent and so the parent’s share capital and share premium are both used.
2) I’m not sure on this one and don’t fully understand it, sorry. We wouldn’t be paying a contingent liability, but it does get recognised in the group accounts at fair value, and shown within the group liabilities. Please let me know if you need more information here.
Thanks
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