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On a bargain purchase under Ind AS 103, the excess of net identifiable assets acquired and liabilities assumed over the consideration transferred (plus NCI and previously held interest) is:
ACapitalised as negative goodwill and amortised over five years
BRecognised in OCI and accumulated in equity as a capital reserve, after reassessing the identification and measurement of assets, liabilities, consideration, NCI and previously held interest
CAdjusted against the carrying values of non-current assets on a pro-rata basis
DRecognised in profit or loss immediately as 'extraordinary income'
Answer & Solution
Correct answer: B. Recognised in OCI and accumulated in equity as a capital reserve, after reassessing the identification and measurement of assets, liabilities, consideration, NCI and previously held interest
Under Ind AS 103, after reassessment (to be sure no item is misidentified or mismeasured), the residual bargain purchase gain is recognised in OCI and accumulated in equity as a capital reserve — Indian carve-out from IFRS 3, which routes it through P&L.
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