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Under Ind AS 101, a JOINT ARRANGEMENT previously accounted for via PROPORTIONATE CONSOLIDATION under previous GAAP transitions to EQUITY METHOD under Ind AS 28. The initial measurement of the investment is:
AZero, with all amounts taken to retained earnings
BThe proportionate share of the joint venturer's net assets at fair value on transition date
CThe aggregate carrying amount of the assets and liabilities the entity had previously proportionately consolidated, INCLUDING goodwill arising on acquisition; the investment is tested for impairment regardless of indicators
DOriginal cost of the investment with no carrying-amount adjustments
Answer & Solution
Correct answer: C. The aggregate carrying amount of the assets and liabilities the entity had previously proportionately consolidated, INCLUDING goodwill arising on acquisition; the investment is tested for impairment regardless of indicators
Ind AS 101 transition from proportionate consolidation to equity method: initial investment = sum of carrying amounts of all assets/liabilities previously consolidated + goodwill. Impairment test is mandatory at transition regardless of indicators. If aggregate is negative AND there is legal/constructive obligation, recognise corresponding liability; otherwise adjust to retained earnings.
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