Page 12 - 16. COMPILER QB - INDAS 103

that an outflow of resources embodying economic benefits will be required to settle the obligation. Hence
H Ltd. will recognize contingent liability of Rs. 2.5cr.
Since S Ltd. has indemnified for Rs. 1 cr., H Ltd. shall recognise an indemnification asset at the same

time for Rs. 1cr.
As per the information given in the question, this indemnified asset is not taxable. Hence, its tax base
will be equal to its carrying amount. No deferred tax will arise on it.
iii) As per Ind AS 103, non-current assets held for sale should be measured at fair value less cost to sell in
accordance with Ind AS 105 ―Non-current Assets Held for Sale and Discontinued Operations‖. Therefore, its

carrying value as per balance sheet has been considered in the calculation of net assets.
iv) Any equity interest in S Ltd. held by H Ltd. immediately before obtaining control over S Ltd. is adjusted
to acquisition-date fair value. Any resulting gain or loss is recognised in the profit or loss of H Ltd.

Calculation of purchase consideration as per Ind AS 103

Investment in S Ltd.
Particulars % Calculation Rs. In lakh
On 1stNov. 20X6 15% [(12/100) x 395 x 15%] 7.11
On 1stJan. 20X7 45%
Own equity given 10,000 x 12% x 45% x 1/2 270
Cash 50
Contingent consideration 22
349.11

v) Calculation of deferred tax on assets and liabilities acquired as part of the business combination,
including current tax and goodwill.

Item Rs. in crore
Book Fair Tax Taxable(dedu Deferred tax
value value base ctible) assets
temporary (liability)
difference @30%
Property, plant and equipment 40 90 40 50 (15)
Intangible assets 20 30 20 10 (3)
Investments 100 350 100 250 (75)
Inventories 20 20 20 - -
Trade receivables 20 20 20 - -
Cash held in functional currency 4 4 4 - -
Non-current asset held for sale 4 4 4 - -
Indemnified asset - 1 1 - -
Borrowings 20 20 20 - -
Trade payables 28 28 28 - -
Provision for warranties 3 3 3 - -
Current tax liabilities 4 4 4 - -

Contingent liability 0.5 - (0.5) 0.15
Deferred tax Liability (92.85)

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