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Bargain purchase: A acquires 80% of B for ₹15 cr cash. Identifiable net assets ₹20 cr; FV of 20% NCI ₹4.2 cr. The former owners had to dispose of their stake by a deadline (forced sale). Compute the bargain-purchase gain when NCI is measured at FV AND when NCI is measured proportionately.
ABoth: gain ₹1 cr
BBoth: gain ₹80 lakh
CNCI at FV: gain ₹80 lakh; NCI proportionate: gain ₹1 cr
DNCI at FV: gain ₹1 cr; NCI proportionate: gain ₹80 lakh
Answer & Solution
Correct answer: C. NCI at FV: gain ₹80 lakh; NCI proportionate: gain ₹1 cr
NCI at FV: gain = 20 − (15 + 4.2) = 0.8 cr = ₹80 lakh. NCI proportionate (20% × 20 = 4): gain = 20 − (15 + 4) = 1 cr. The reason (forced sale) is the 'clear evidence' the Ind AS expects before recognising the gain in OCI and accumulating in equity as capital reserve.
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