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An acquirer transfers, as part of consideration, an asset whose carrying value is ₹100 cr and fair value is ₹130 cr. The asset is transferred TO THE FORMER OWNERS of the acquiree (not to the acquiree itself). The acquirer should:
AUse carrying value ₹100 cr in consideration; no gain or loss
BUse fair value ₹130 cr in consideration; remeasure the asset to FV and recognise gain of ₹30 cr in P&L because control of the asset passes to the former owners
CUse carrying value ₹100 cr; defer the ₹30 cr difference until disposal
DUse fair value ₹130 cr but recognise the gain in OCI
Answer & Solution
Correct answer: B. Use fair value ₹130 cr in consideration; remeasure the asset to FV and recognise gain of ₹30 cr in P&L because control of the asset passes to the former owners
When the transferred asset leaves the combined-entity boundary (former owners receive it), it is derecognised at FV and the difference between FV and CV is a P&L gain/loss. Contrast: if the asset stays inside the combined entity (transferred to the acquiree, not its former owners), no gain/loss is recognised — the asset is carried at pre-acquisition CV.
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