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Acquisition-related transaction costs (e.g. stamp duty, legal fees) in a business combination under Ind AS 103 are:
AAdjusted against the bargain purchase gain
BCapitalised as goodwill
CCapitalised as part of the consideration transferred
DExpensed in the period in which they are incurred and not included in the consideration transferred
Answer & Solution
Correct answer: D. Expensed in the period in which they are incurred and not included in the consideration transferred
Ind AS 103 requires acquisition-related costs to be expensed in the period incurred. In contrast, transaction costs in an asset acquisition are capitalised as part of the cost of assets acquired — one of the key distinguishing features between the two.
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