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A non-binding Letter of Intent is signed with an expected closure in two months. Can the acquirer account for the business combination from the LOI date?
AYes — once an LOI is signed, the parties are practically committed
BOnly if the LOI specifies a 'no-shop' clause
CYes, if both boards have informally noted the LOI
DNo — a non-binding LOI does not effectively transfer control
Answer & Solution
Correct answer: D. No — a non-binding LOI does not effectively transfer control
Without legally enforceable transfer of control, a non-binding LOI cannot be the acquisition date. Ind AS 103/110 require actual control to pass.
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