Home › CA Final › financialreporting › Ind AS 103 — Business Combinations: Scope, Definition, Concentration Test & Identifying Acquirer › Where the acquired set HAS outputs at acquisitio…
Where the acquired set HAS outputs at acquisition date, an acquired process is 'substantive' if (per Ind AS 103 application guidance) it:
AGenerates positive operating cash flow for two consecutive years
BHas been audited by the same firm that audits the acquirer's financial statements
CHas been continuously used by the acquiree for at least three years
DIs critical to continuing outputs and the acquired inputs include an organised workforce; OR significantly contributes to continued outputs and is unique/scarce or cannot be replaced without significant cost, effort or delay
Answer & Solution
Correct answer: D. Is critical to continuing outputs and the acquired inputs include an organised workforce; OR significantly contributes to continued outputs and is unique/scarce or cannot be replaced without significant cost, effort or delay
Where outputs exist, the chapter offers TWO alternative tests: (a) critical to continuing outputs with an organised workforce; OR (b) significantly contributes to continued outputs AND is unique/scarce or hard to replace. Tenure, audit-firm identity or cash-flow streaks are not the criteria.
Related questions
Company P holds 40,000 of 1,00,000 shares of Company X and an option (currently exercisablABC Ltd. incorporates a new company Super Ltd. to acquire 100% of Focus Ltd. Super Ltd. taOn a bargain purchase under Ind AS 103, the excess of net identifiable assets acquired andIn a business combination, an acquired process (or group of processes) is 'substantive' whCompany A is a pharma company with skilled workforce, an IPR (patents over certain drugs) Identify the statement on the OPTIONAL concentration test in Ind AS 103 that is INCORRECT.Veera Ltd. and Zeera Ltd. form a new entity, Meera Ltd., which issues 100 shares to Veera'Under the concentration test, which of the following pairs CANNOT be treated as 'similar a