Page 22 - 16. COMPILER QB - INDAS 103

2) Computation Goodwill/Bargain Purchase Gain
Particulars As at 30.6.20X1
(Rs.)
Total Non - Current Assets 2,56,641
Total Current Assets (Except Cash & Cash Equivalent of Rs. 59,994
66,660) (1,26,654 – 66,660)

Total Non-Current Liabilities (99,990)
Total Current Liabilities (66,660)
Total Deferred Tax Liability (Refer Working note 3) (29,997)
Net Assets Acquired 1,19,988
Less: Consideration Paid (1,00,000)
Gain on Bargain Purchase (To be transferred to OCI) 19,988
*In extremely rare circumstances, an acquirer will make a bargain purchase in a business combination in which
the value of net assets acquired in a business combination exceeds the purchase consideration. The acquirer

shall recognise the resulting gain in other comprehensive income on the acquisition date and accumulate the
same in equity as capital reserve, if the reason for bargain purchase gain is clear and evidence exists. If there
does not exist clear evidence of the underlying reasons for classifying the business combination as a bargain
purchase, then the gain shall be recognised directly in equity as capital reserve. Since in the above scenario it

is clearly evident that due to liquidity issues, Company Z has to withdraw their participating right from
AWM/01. The said bargain purchase gain should be transferred to other comprehensive income on the
acquisition date.

3) Computation of Deferred Tax Liability arising on Business Combination
Particulars Acquisition Date Value (Rs.)

Total Non - Current Assets 2,56,641
Total Current Assets (Except Cash & Cash Equivalent of Rs. 66,660) 59,994
Total Non-Current Liabilities (99,990)

Total Current Liabilities (66,660)
Net Assets Acquired at Fair Value 1,49,985
Book value of Net Assets Acquired 49,995
Temporary Difference 99,990
DTL @ 30% on Temporary Difference 29,997

Note: As per Ind AS 103, in case an entity acquires another entity step by step through series of purchase

then the acquisition date will be the date on which the acquirer obtains control. Till the time the control is
obtained the investment will be accounted as per the requirements of other Ind AS 109, if the investments are
covered under that standard or as per Ind AS 28, if the investments are in Associates or Joint Ventures.
If a business combination is achieved in stages, the acquirer shall remeasure its previously held equity interest

in the acquire at its acquisition-date fair value and recognise the resulting gain or loss, if any, in profit or loss
or other comprehensive income, as appropriate.
Since in the above transaction, company X does not hold any prior interest in Company Z & company holds
only 30% PI rights in Block AWM/01 through unincorporated joint venture, this is not a case of step
acquisition.
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