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CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Financial Reporting

Case: Anant Ltd holds 75% of Bhima Ltd. On 31 March 2025 Anant sold 20% of Bhima's shares (out of its 75%) to an outside investor for ₹9,00,000, still retaining control (55%). The carrying amount of Bhima's net assets in the consolidated statements, including goodwill, was ₹30,00,000 at the date of sale and the NCI before sale was ₹7,50,000. Which treatment is correct in Anant's consolidated financial statements?

The sale is an equity transaction because control is retained. NCI increases by 20% of ₹30,00,000, which is ₹6,00,000, and the excess of proceeds, ₹3,00,000, is recognised directly in equity attributable to owners, with no profit or loss gain.

  1. ARecognise a gain in profit or loss of ₹3,00,000 on the disposal
  2. BRecognise NCI increase of ₹6,00,000 and the balance ₹3,00,000 as an equity adjustment attributable to owners of the parentCorrect
  3. CDerecognise Bhima's assets and remeasure the retained 55% at fair value
  4. DRecognise NCI of ₹9,00,000 with no other entry

Explanation

Disposal without loss of control is an equity transaction under Ind AS 110. NCI rises by 20% x 30,00,000 = 6,00,000 (NCI becomes 45%). Consideration 9,00,000 minus 6,00,000 = 3,00,000 is credited directly to equity of owners. No gain goes to profit or loss; remeasurement applies only when control is lost.

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