Page 18 - 16. COMPILER QB - INDAS 103

Cash and cash equivalents 2,00,000 4,00,000 1,00,000 2,00,000
Other Current Assets 2,25,000 50,000 25,000 50,000
Total Current Assets 6,75,000 9,50,000 1,90,000 3,80,000
Total Assets 13,50,000 23,00,000 4,25,000 8,50,000
Equity and Liabilities
Equity

Equity share capital 3,00,000 3,00,000 1,00,000 1,00,000
Other equity 2,00,000 3,00,000 75,000 2,50,000
Total Equity 5,00,000 6,00,000 1,75,000 3,50,000
Liabilities
Non-Current Liabilities
Provisions 4,00,000 8,00,000 1,00,000 2,00,000
Other Liabilities 1,50,000 3,00,000 50,000 1,00,000
Total Non-Current Liabilities 5,50,000 11,00,000 1,50,000 3,00,000
Current Liabilities
Financial Liabilities
Trade Payables 3,00,000 6,00,000 1,00,000 2,00,000
Total Current Liabilities 3,00,000 6,00,000 1,00,000 2,00,000
Total Liabilities 13,50,000 23,00,000 4,25,000 8,50,000
Additional Information:

1. Fair Value of PPE & Development CWIP owned by Company Z as per Market participant approach is Rs.
5,00,000 & Rs. 2,00,000 respectively.
2. Fair Value of all the other assets and liabilities acquired are assumed to be at their carrying values (except
cash & cash equivalents). Cash and cash equivalents of Company Z are not to be acquired by Company X

as per the terms of agreement.
3. Tax rate is assumed to be 30%.
4. As per Ind AS 28, all the joint operators are joint ventures whereby each parties that have joint control of
the arrangement have rights to the Assets and obligation to Liabilities of the arrangement and therefore
every operator records their share of assets and liabilities in their books.

You need to determine the following:
1. Whether the above acquisition falls under business or asset acquisition as defined under business
combination standard Ind AS 103?
2. Determine the acquisition date in the above transaction.
3. Prepare Journal entries for the above-mentioned transaction.

Draft the Balance Sheet for Company X based on your analysis in Part 1 above as at acquisition date.
SOLUTION

(1) Ind AS 103 defines business as an integrated set of activities and assets that is capable of being
conducted and managed for the purpose of providing goods or services to customers, generating investment
income (such as dividends or interest) or generating other income from ordinary activities.
For a transaction to meet the definition of a business combination (and for the acquisition method of
accounting to apply), the entity must gain control of an integrated set of assets and activities that is

more than a collection of assets or a combination of assets and liabilities.
16. 17