Page 14 - 16. COMPILER QB - INDAS 103

measurement period provides the acquirer with a reasonable time to obtain the information necessary to
identify and measure the following as of the acquisition date in accordance with the requirements of this
Ind AS:

 the identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree;
and

 the resulting goodwill or gain on a bargain purchase.

The Ind AS states that the acquirer recognises an increase (decrease) in the provisional amount recognised for
an identifiable asset (liability) by means of a decrease (increase) in goodwill.
It also states that during the measurement period, the acquirer shall recognise adjustments to the provisional
amounts as if the accounting for the business combination had been completed at the acquisition date.
It further states that after the measurement period ends, the acquirer shall revise the accounting for a

business combination only to correct an error in accordance with Ind AS 8 ―Accounting Policies, Changes in
Accounting Estimates and Errors‖.
On 31st December, 20X7, H Ltd. has established that it has obtained all the information necessary for the
accounting of the business combination and the more information is not obtainable. Therefore, the
st
measurement period for acquisition of S Ltd. ends on 31 December, 20X7.
On 31st May, 20X7 (ie within the measurement period), H Ltd. learned that certain customer relationships
existing as on 1st January, 20X7 which met the recognition criteria of an intangible asset as on that date
were not considered during the accounting of business combination for the year ended 31st March, 20X7.
Therefore, H Ltd. shall account for the acquisition date fair value of customer relations existing on 1st January,
20X7 as an identifiable intangible asset. The corresponding adjustment shall be made in the amount of
goodwill.

Accordingly, the amount of goodwill will be changed due to identification of new assets from retrospective date
for changes in fair value of assets and liabilities earlier recognised on provisional amount (subject to meeting
the condition above for measurement period). NCI changes would impact the consolidated retained earnings
(parent‖s share). Also NCI will be increased order eased based on the profit during the post-acquisition period.

Journal entry
Customer relationship Dr. 3.5crore
To NCI 1.4crore
To Goodwill 2.1crore
However, the increase in the value of customer relations after the acquisition date shall not be accounted for

by H Ltd., as the customer relations developed after 1st January, 20X7 represents internally generated
intangible assets which are not eligible for recognition on the balance sheet.
(c) Since the contingent considerations payable by H Ltd is not classified as equity and is within the scope of
Ind AS 109 ―Financial Instruments‖, the changes in the fair value shall be recognised in profit or loss.
Change in Fair value of contingent consideration (23-22) Rs. 1 crore will be recognized in the Statement of

Profit and Loss.

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