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Under Ind AS 103, a 'business combination' occurs when an acquirer obtains control of:
AA collection of assets and liabilities that does not constitute a business
BA business — defined as an integrated set of activities and assets capable of being conducted to provide goods/services, generate investment income or other ordinary-activity income
CAny holding of more than 20% of the equity of another entity
DAny acquisition where consideration exceeds the carrying value of net assets
Answer & Solution
Correct answer: B. A business — defined as an integrated set of activities and assets capable of being conducted to provide goods/services, generate investment income or other ordinary-activity income
Two elements are required: (i) acquirer obtains control as defined in Ind AS 110; and (ii) the acquiree is a 'business' — an integrated set of activities and assets capable of providing goods/services or generating returns.
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