Home › CA Final › financialreporting › Ind AS 103 — Reverse Acquisition Mechanics, Replacement Awards, Contingent vs Deferred Consideration & NCI Methods › Professional Ltd. acquires 70% of Dynamic Ltd. b…
Professional Ltd. acquires 70% of Dynamic Ltd. by issuing 2,00,000 of its own shares (FV ₹40 each) in a 1:2 ratio. The cash-equivalent PC from share issuance is:
A₹40 lakh
B₹56 lakh (2,00,000 × 70% × ₹40)
C₹80 lakh
D₹140 lakh
Answer & Solution
Correct answer: B. ₹56 lakh (2,00,000 × 70% × ₹40)
Only the portion of issued shares that represents PC for the controlling stake counts: 2,00,000 × 70% × ₹40 = ₹56 lakh. The remaining 30% sits as NCI on the Dynamic side, not as PC.
Related questions
HUL recognised Indemnification Asset of ₹608 cr against contingent tax liabilities of GSK HUL also acquired Horlicks IPR for ₹3,045 cr separately, plus ₹91 cr transaction cost. TheHUL's GSK CH disclosures show TRANSACTION COST split as: ₹44 cr (related to issuance of shHindustan Unilever's merger of GSK CH (1 Apr 2020) shows total consideration ₹40,242 cr (1Shyam Ltd. negotiates merger with Ram Ltd. Key dates: 9 Apr (start), 10 May (board authoriIn a reverse acquisition (legal acquirer ABX is shell; accounting acquirer BX is larger opContinuing the example: NCI proportionate at 30% of ₹516.5 = ₹154.95; PC = ₹87.43 lakh (₹5Continuing the Professional/Dynamic example: PPE FV ₹350 lakh (BV ₹500 lakh), contingent l