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Company A is a pharma company with skilled workforce, an IPR (patents over certain drugs) and a production plant with regulatory approvals, but no revenue or customer contracts yet. Company B acquires Company A. Is Company A a 'business' under Ind AS 103?
ANo, because there are no signed customer contracts
BYes, because the integrated set of workforce, IP and approved plant constitutes substantive inputs and processes capable of producing outputs, even though outputs are not yet generated
COnly if Company B operates in a different therapeutic area
DNo, because there is no revenue
Answer & Solution
Correct answer: B. Yes, because the integrated set of workforce, IP and approved plant constitutes substantive inputs and processes capable of producing outputs, even though outputs are not yet generated
Outputs are NOT required. The inputs (workforce, IPR, approved plant) plus strategic and operational processes are 'capable of being managed' to produce outputs. The illustration in the chapter explicitly concludes Company A is a business.
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