Page 9 - 16. COMPILER QB - INDAS 103

Intangible assets while determining Good-will / Bargain Purchase for the transaction:
(i) Patent owned by ABR Ltd.: The patent owned will be recognised at fair value by KK Ltd. even though it
was not recognised by ABR Ltd. in its financial statements. The patent will be amortised over the

remaining useful life of the asset i.e. 8 years. Since the company is awaiting the outcome of the trials,
the value of the patent can-not be estimated at Rs. 15 crore and the extra Rs. 5 crore should only be
disclosed as a Contingent Asset and not recognised.
(ii) Patent internally developed by ABR Ltd.: Further as per lnd AS 38 ―Intangible Assets‖, after initial
recognition, an intangible asset shall be carried at revalued amount, being its fair value at the date of the

revaluation less any subsequent accumulated amortisation and any subsequent accumulated impairment
losses. For the purpose of revaluations under this Standard, fair value shall be determined by reference to
an active market.
From the information given in the question, it appears that there is no active market for patents since
the fair value is based on early assessment of its sale success. Hence it is suggested to use the cost

model and recognise the patent at the actual development cost of Rs. 12 crore.
(iii) Grant of Licence to ABR Ltd. by the Government: As regards to the five-year licence, Ind AS 38
requires to recognize grant assets at fair value. KK Ltd. can recognize both the asset (licence) and the
grant at Rs10 crore to be amortised over 5 years.
Hence the revised working would be as follows:.
Fair value of net assets of ABR Ltd. Rs 15 crore
Add: Patent (10 + 12) Rs 22 crore
Add: Licence Rs 10 crore
Less: Grant for Licence (Rs10 crore)
Rs 37 crores
Purchase Consideration Rs 35 crores
Bargain purchase Rs 2 crore

Q6. (RTP Nov. 19 & MTP March 19)

H Ltd. acquired equity shares of S Ltd., a listed company, in two tranches as mentioned in the below table:
Date Equity stake purchased Remarks

1stNovember, 20X6 15% The shares were purchased based on the
quoted price on the stock
1stJanuary, 20X7 45% exchange on the relevant dates.

Both the above-mentioned companies have Rupees as their functional currency. Consequently, H Ltd. acquired
st
control over S Ltd. on 1 January, 20X7. Following is the Balance Sheet of S Ltd. as on that date:
Particulars Carrying value (Rs. in Fair value (Rs.
crore) in crore)
ASSETS:
Non-current assets
(a) Property, plant and equipment 40.0 90.0
(b) Intangible assets 20.0 30.0
(c) Financial assets
- Investments 100.0 350.0
Current assets
16. 8