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A holds 5% in B at FVOCI (Ind AS 109 election). FV unrealised gain in OCI = ₹5,000; carrying amount ₹1,05,000. A buys remaining 95% — step acquisition. Identify the correct accounting at acquisition.
ADo NOT reclassify ₹5,000 to P&L (FVOCI election prohibits recycling for equity instruments); 5% interest at FV (already reflected); the ₹1,05,000 + 95% PC enters acquisition accounting
BContinue 5% at carrying amount; no FV step-up
CReclassify ₹5,000 OCI to P&L; remeasure 5% interest to acquisition-date FV with gain through P&L
DReclassify ₹5,000 to retained earnings; remeasure to P&L
Answer & Solution
Correct answer: A. Do NOT reclassify ₹5,000 to P&L (FVOCI election prohibits recycling for equity instruments); 5% interest at FV (already reflected); the ₹1,05,000 + 95% PC enters acquisition accounting
FVOCI equity-instrument election prohibits any reclassification to P&L (no recycling). The 5% is already at FV (no further remeasurement). The acquisition-date FV (₹1,05,000) + 95% PC enters the goodwill computation. Cumulative OCI gain remains in equity (may transfer within equity, e.g. to retained earnings).
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