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CA Final · Financial Reporting · Ind AS 40 Investment Property

Ananya Holdings Ltd acquires a company that owns a mall in Hyderabad, along with leasing staff, processes and tenant management systems. A question arises whether to apply Ind AS 40 alone to the acquisition. Which statement is correct as per Ind AS 40?

Whether the acquisition is a business combination must be judged under Ind AS 103, not Ind AS 40. Where a transaction is a business combination that includes investment property, both Ind AS 103 and Ind AS 40 are applied separately.

  1. AJudgement is needed to decide whether it is a business combination under Ind AS 103; if it is, both Ind AS 103 and Ind AS 40 are applied separatelyCorrect
  2. BInd AS 40 paragraphs 7-14 decide whether the acquisition is a business combination, so Ind AS 103 is not needed
  3. CAny acquisition of investment property is automatically an asset acquisition outside Ind AS 103
  4. DInd AS 103 applies and Ind AS 40 never applies after a business combination

Explanation

Ind AS 40 states that reference must be made to Ind AS 103 to decide whether an acquisition is a business combination. Its paragraphs 7-14 only concern owner-occupied versus investment property. Where the transaction is a business combination that includes investment property, both Standards are applied separately. The option saying Ind AS 40 decides the matter reverses this.

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