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CA Final · Financial Reporting · Ind AS 103 Business Combinations

A business combination is described as a 'merger of equals', where neither party is clearly dominant but one entity obtains control of the other's business. Under Ind AS 103, such a transaction is:

Such a transaction is a business combination under Ind AS 103. The definition states that transactions sometimes called true mergers or mergers of equals are also business combinations, provided an acquirer obtains control of a business. Form of consideration does not matter, and it is not outside the scope.

  1. AOutside the scope of the Standard
  2. BA business combination, as transactions called true mergers or mergers of equals are included in the definitionCorrect
  3. CAccounted for only as a pooling of interests
  4. DTreated as a business combination only if the consideration is cash

Explanation

The definition of business combination states that an acquirer obtains control of one or more businesses and that transactions sometimes called true mergers or mergers of equals are also business combinations. Hence they are within the Standard. The other options impose treatments or conditions not in the definition.

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