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Where in the financial statements does a bargain purchase gain under Ind AS 103 go after the acquirer has reassessed the inputs and confirmed the gain?
ARetained earnings as an exceptional item
BProfit or loss as 'extraordinary income'
CGoodwill as a negative amount
DOther Comprehensive Income, accumulated in equity as capital reserve (assuming clear evidence exists for the bargain); if no clear evidence, directly in equity as capital reserve
Answer & Solution
Correct answer: D. Other Comprehensive Income, accumulated in equity as capital reserve (assuming clear evidence exists for the bargain); if no clear evidence, directly in equity as capital reserve
Indian carve-out from IFRS 3: the bargain purchase gain goes to OCI (accumulated as capital reserve in equity) when clear evidence supports the bargain; if such evidence is missing, the amount goes directly to equity as capital reserve. P&L recognition is the IFRS 3 treatment, not Ind AS 103.
Related questions
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