Home › CA Final › financialreporting › Ind AS 103 — Reverse Acquisition Mechanics, Replacement Awards, Contingent vs Deferred Consideration & NCI Methods › HUL's GSK CH disclosures show TRANSACTION COST s…
HUL's GSK CH disclosures show TRANSACTION COST split as: ₹44 cr (related to issuance of shares) recognised against equity; ₹146 cr (NOT directly attributable to share issue) under exceptional items in P&L. Justify this split.
ACosts of issuing equity are netted against equity per Ind AS 32; other acquisition-related costs are expensed under Ind AS 103 paragraph 53
BBoth should be netted against equity
CBoth should have been capitalised to goodwill
DBoth should be expensed
Answer & Solution
Correct answer: A. Costs of issuing equity are netted against equity per Ind AS 32; other acquisition-related costs are expensed under Ind AS 103 paragraph 53
Ind AS 32 requires incremental costs of issuing equity to be deducted from equity (₹44 cr). All other acquisition-related costs (advisory/legal/regulatory) are expensed under Ind AS 103 (₹146 cr). The bifurcation is mandatory disclosure under paragraph 59(m).
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. TheHindustan 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 lProfessional Ltd. acquires 70% of Dynamic Ltd. by issuing 2,00,000 of its own shares (FV ₹