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In a business combination achieved without transfer of consideration (e.g. dual-listed corporation, stapling, minority veto lapse), what does Ind AS 103 attribute to the owners of the acquiree?
ACapital reserve equal to fair value of acquiree's net assets
BGoodwill equal to fair value of acquiree
CThe acquiree's net assets recognised under Ind AS 103 are attributed to the owners of the acquiree as non-controlling interest in the acquirer's post-combination consolidated FS — possibly 100% of the equity interests in the acquiree
DNothing — they retain their original equity interest only
Answer & Solution
Correct answer: C. The acquiree's net assets recognised under Ind AS 103 are attributed to the owners of the acquiree as non-controlling interest in the acquirer's post-combination consolidated FS — possibly 100% of the equity interests in the acquiree
Where no consideration is transferred (Ind AS 103 paragraph 43-44), the acquirer attributes the acquiree's net assets to its former owners as NCI — even if that means 100% NCI in those particular equity interests. This is the structural treatment for DLC, stapling and minority-veto-lapse scenarios.
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