Page 4 - 16. COMPILER QB - INDAS 103

SOLUTION

Computation of goodwill impairment
NCI at fair value NCI at of net assets
Rs in ‘000 Rs in ‘000
Cost of investment
Share exchange (12,000 x 75% x 2/3 x Rs 6.50) 39,000 39,000
Deferred consideration (7,150 / 1.10) - note 2 6,500 6,500
Contingent consideration - note 3 25,000 25,000
Non-controlling interest at date of acquisition:
Fair value – 3000 x Rs 6 18,000
% of net assets – 68,000 (Refer W.N. 1) x 25% 17,000

Net assets on the acquisition date (Refer W.N. 1) (68,000) (68,000)
Goodwill on acquisition 20,500 19,500
Impairment of goodwill @ 10% 2,050 1,950

Working Notes:
1.

Net assets on the acquisition date Rs ’000
Fair value at acquisition date 70,000
Deferred tax on fair value adjustments [20% x (70,000 – 60,000)] (2,000)
68,000

2. The consideration of Rs. 71,50,000 is payable after 1 year. Hence, it will be included in the purchase
consideration at its present value.

3. Contingent considerations are to be included at their Fair Value as on the Date of Acquisition, and not at
the actual amount payable. Hence, FV as on 1st July will be included.
4. Deferred Tax is calculated when there is a difference between the Carrying Amount and the Tax Base.
In the given question, it is assumed that the Tax base = carrying value in the books. Hence, the differences

between the Tax Base and the Fair Value (which will be the carrying amount for acquirer company) will give
rise to Deferred tax adjustments.
NCI shares = 1,20,00,000 x 25% = 30,00,000

Q3. (Nov. 18)

Smart Technologies Inc. is a Company incorporated in India in 1998 having business in the field of
development and installation of software, trading of computer peripherals and other IT related equipment and
provision of cloud computing services along with other services incidental thereto. It is one of the leading
brands in India.
After witnessing immense popularity and support in its niche market, Smart Technologies further grew by

bringing its subsidiaries namely:
Company Name Principle Activity
Cloud Industries India Private Limited Provision of cloud computing services.
Micro Fly India Private Limited Trading of computer peripherals like mouse, keyboard, printer etc.

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