Answer to Question #171632 in Accounting for Flozzy kamau

Question

A company issues 12000 ordinary shares of $100 each credited as fully paid, such share capital being valued at $1,500,000 and bakance payable is to be discharged by issue of 12% debentures of $100 each. Ordinary shares and debentures give the purchase consideration. What is the purchase consideration

Answer 1

Purchase consideration is calculated by adding up the values of various assets taken over by the purchasing company and then deducting there from the values of various liabilities taken over by the purchasing company.

So, the total value of debentures should be equal $1,500,000 which is the total value of share capital issued.