Home › CA Final › financialreporting › Ind AS 103 — Reverse Acquisition Mechanics, Replacement Awards, Contingent vs Deferred Consideration & NCI Methods › HUL recognised Indemnification Asset of ₹608 cr …
HUL recognised Indemnification Asset of ₹608 cr against contingent tax liabilities of GSK CH (capped at USD 150 mn over 10 years). Subsequent measurement of this indemnification asset should:
ABe subsumed into goodwill at each year-end
BStay at FV at acquisition date until expiry
CBe remeasured at amortised cost
DMirror the corresponding indemnified liability's basis, subject to the contractual cap (USD 150 mn) and collectability assessment if not FV-measured
Answer & Solution
Correct answer: D. Mirror the corresponding indemnified liability's basis, subject to the contractual cap (USD 150 mn) and collectability assessment if not FV-measured
Ind AS 103 paragraph 57: subsequent measurement on the SAME BASIS as the indemnified liability/asset, with consideration for contractual limitations (here USD 150 mn) and management's collectability assessment. Derecognition only on collection/sale/loss of right.
Related questions
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 lProfessional Ltd. acquires 70% of Dynamic Ltd. by issuing 2,00,000 of its own shares (FV ₹