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acquired, to measure the fair value of both the NCI and the consideration transferred, and to identify
transactions that were not part of the business combination.
Following that review, Moon Ltd. can conclude that the procedures followed and the resulting measurements

were appropriate.
Identifiable net assets 90,00,000
Less: Consideration transferred (60,00,000)
NCI (90,00,000 x 25%) (22,50,000)
Gain on bargain purchase 7,50,000

Q27. (Exam Nov. 19 – 16 Marks & MTP April 21 – 16 Marks) – (Similar to Q16)

st
The Balance Sheet of David Ltd. and Parker Ltd. as of 31 March, 2019 is given below: (Rs in lakh)
Assets David Ltd. Parker Ltd.
Non-current assets:
Property, plant and equipment 400 600
Investment 300 200
Current assets:
Inventories 300 100
Financial assets
Trade receivables 400 200
Cash and cash equivalents 150 200
Others 300 300
Total 1,850 1,600
Equity and Liabilities
Equity
Share capital - Equity shares of Rs 100 each for Parker Ltd.
& Rs 10 each for David Limited 500 400
Other Equity 700 275
Non-current liabilities:
Long term borrowings 200 300
Long term provisions 100 80
Deferred tax 20 55
Current liabilities:
Short term borrowings 130 170
Trade payables 200 320
Total 1,850 1,600

Other Information:

st
(i) David Ltd. acquired 70% shares of Parker Ltd. on 1 April, 2019·by issuing its own shares in the ratio of 1
share of David Ltd. for every 2 shares of Parker Ltd. The fair value of the shares of David Ltd. was Rs
50 per share.
(ii) The fair value exercise resulted in the following :

st
(1) Fair value of property, plant and equipment (PPE) on 1 April, 2019 was Rs 450 lakh.
(2) David Ltd. agreed to pay an additional payment as consideration that is higher of Rs 30 lakh and

25% of any excess profits in the first year after acquisition, over its profits in the preceding 12
months made by Parker Ltd. This additional amount will be due after 3 years. Parker Ltd. has
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