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Entity A pays ₹300 cr for an additional 50% stake in Entity B (already owned 20%). At acquisition, Entity B has Building FV ₹1,000 cr, cash ₹200 cr, financial liabilities ₹800 cr and DTL ₹150 cr; FV of NCI is ₹120 cr and FV of A's previously held 20% is ₹80 cr. Applying the optional concentration test, the FV of gross assets acquired (for concentration purposes) is:
A₹1,000 crores
B₹1,500 crores
C₹1,100 crores
D₹1,150 crores
Answer & Solution
Correct answer: C. ₹1,100 crores
Per the test: (FV consideration + FV NCI + FV previously-held interest) + FV liabilities assumed (excl. DTL) − cash and cash equivalents = (300+120+80) + 800 − 200 = 1,100 cr. Since ₹1,000 cr (building) is ≈91% of ₹1,100 cr, substantially all the FV is concentrated in one asset, so the deal qualifies as an asset acquisition.
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