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CA Final · Financial Reporting · Ind AS 1 Presentation of Financial Statements

Arjun Infra Ltd acquired a business and recognised a bargain purchase gain under Ind AS 103. In preparing the statement of changes in equity reconciliation for each component of equity, which statement best reflects Ind AS 1 as notified in India?

The reconciliation of each component of equity must include the bargain purchase gain. Ind AS 1 amended paragraph 106(d)(iv) to require disclosure of recognition of bargain purchase gain arising on a business combination, aligning with the treatment in Ind AS 103, unlike the unamended IAS 1 wording.

  1. ABargain purchase gain is excluded from the reconciliation of components of equity as it is a business combination item
  2. BThe reconciliation need not show it because it is not a transaction with owners
  3. CParagraph 106(d)(iv) was amended so that the reconciliation of each component of equity includes the recognition of bargain purchase gain arising on business combination, in line with Ind AS 103Correct
  4. DThe gain is shown only in the Statement of Profit and Loss with no equity disclosure

Explanation

The Ind AS 1 comparison with IAS 1 states that paragraph 106(d)(iv) was amended to include disclosure of the recognition of bargain purchase gain on business combination, consistent with Ind AS 103 treatment. So the reconciliation must show it. The other options deny this amendment.

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