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Bargain purchase: Alpha acquires 80% of Beta. Beta's identifiable net assets (₹500 assets − ₹100 liab) = ₹400 lakh. PC ₹300 lakh; FV NCI ₹84 lakh. Compute the bargain purchase under NCI-FV and NCI-proportionate methods.
ANCI at FV: ₹20 lakh; NCI proportionate (₹80 lakh): ₹16 lakh
BBoth methods give ₹20 lakh
CNCI at FV: ₹16 lakh (= 400 − 300 − 84); NCI proportionate (₹80 lakh): ₹20 lakh (= 400 − 300 − 80)
DBoth methods give ₹16 lakh
Answer & Solution
Correct answer: C. NCI at FV: ₹16 lakh (= 400 − 300 − 84); NCI proportionate (₹80 lakh): ₹20 lakh (= 400 − 300 − 80)
NCI at FV: bargain = 400 − (300 + 84) = ₹16. NCI proportionate: bargain = 400 − (300 + 80) = ₹20. Differs by the difference in NCI measurement; the FV NCI captures more of the bargain on the NCI side, leaving less for the acquirer.
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