Home › CA Final › financialreporting › Ind AS 103 — Closing Illustrations: Reverse Acquisition Consolidated BS, Contingent Consideration Classification, Transitory Common Control › An acquirer takes control on 1 Nov 20X1. Cash co…
An acquirer takes control on 1 Nov 20X1. Cash consideration ₹59 lakh; 1 lakh shares × ₹10 FV = ₹10 lakh; contingent consideration FV ₹3 lakh; previously held interest FV ₹20 lakh (carrying amount ₹6 lakh); identifiable net assets at acquisition ₹60 lakh; NCI at FV ₹7.5 lakh; transaction costs ₹1 lakh. Goodwill and P&L impact of step-up?
AGoodwill ₹40.5 lakh; no step-up gain; transaction costs capitalised
BGoodwill ₹47 lakh; no step-up; transaction costs in goodwill
CGoodwill ₹39.5 lakh; step-up gain in P&L ₹14 lakh; transaction costs ₹1 lakh expensed
DGoodwill ₹39.5 lakh; step-up loss ₹14 lakh
Answer & Solution
Correct answer: C. Goodwill ₹39.5 lakh; step-up gain in P&L ₹14 lakh; transaction costs ₹1 lakh expensed
PC = 59 + 10 + 3 + 20 = ₹92 lakh. Goodwill = 92 + 7.5 NCI − 60 net assets = ₹39.5 lakh. Step-up gain = FV 20 − CV 6 = ₹14 lakh to P&L (assuming previously held interest was NOT at FVOCI election). Transaction costs of ₹1 lakh expensed under Ind AS 103.
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