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F acquired G. After acquisition, F's loan to G's customer B was provisionally valued at FV. SCENARIO 1: post-acquisition information shows the loan's FV at acquisition date should have been lower because the customer's credit was weaker than estimated (a fact that existed at acquisition). SCENARIO 2: post-acquisition, the customer loses a major contract (a new event). Identify treatment.
AScenario 1: goodwill adjustment; Scenario 2: capital reserve adjustment
BBoth scenarios: post-acquisition P&L adjustment only
CBoth scenarios: retrospective adjustment to goodwill within the measurement period
DScenario 1: retrospective adjustment to loan with corresponding increase in goodwill; Scenario 2: provision for loss under Ind AS 109 through P&L (NOT goodwill — new event after acquisition)
Answer & Solution
Correct answer: D. Scenario 1: retrospective adjustment to loan with corresponding increase in goodwill; Scenario 2: provision for loss under Ind AS 109 through P&L (NOT goodwill — new event after acquisition)
Measurement period adjustments are only for new INFORMATION about facts/circumstances that existed at acquisition (Scenario 1). New EVENTS after acquisition (Scenario 2 — major customer loss) are post-acquisition Ind AS 109 impairments through P&L. Goodwill is untouched.
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