Page 37 - 16. COMPILER QB - INDAS 103

replaced awards the vesting period has been reduced to one year (one year from the acquisition date).
The fair value of the award on the acquisition date was as follows:
i. Original award- Rs. 5 lakh
ii. Replacement award- Rs. 8 lakh.

e. D Ltd had a lawsuit pending with a customer who had made a claim of Rs. 50 lakh. Management
reliably estimated the fair value of the liability to be Rs. 5 lakh.
f. The applicable tax rate for both entities is 30%.
You are required to prepare the opening consolidated balance sheet of P Ltd. as on 1st April, 20X2. Assume

10% discount rate.
SOLUTION

Consolidated Balance Sheet of P Ltd as on 1st April, 20X2 (Rs. in Lakhs)
Amount
Assets
Non-Current Assets:
Property, plant and equipment 650
Investment 500
Current assets:
Inventories 400
Financial assets:
Trade receivables 750
Cash and cash equivalents 300
Others 630
Total 3,230
Equity and Liabilities
Equity
Share capital- Equity shares of Rs. 100 each 514
Other Equity 1128.62
NCI 154.95
Non-Current liabilities:
Long term borrowings 450
Long term provisions (50+70+28.93) 148.93
Deferred tax 28.5
Current Liabilities:
Short term borrowings 250
Trade payables 550
Provision for Law suit damages 5
Total 3230
Notes:
a. Fair value adjustment- As per Ind AS 103, the acquirer is required to record the assets and liabilities at
their respective fair value. Accordingly, the PPE will be recorded at Rs. 350 lakhs.
b. The value of replacement award is allocated between consideration transferred and post combination

expense. The portion attributable to purchase consideration is determined based on the fair value of the
replacement award for the service rendered till the date of the acquisition. Accordingly, 2.5 (5 x 2/4) is
considered as a part of purchase consideration and is credited to P Ltd equity as this will be settled in

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