Skip to content

CMA Final · Corporate Financial Reporting · Accounting and Reporting of Joint Operation

Epsilon Ltd, Zeta Ltd and Eta Ltd jointly control a joint operation and are all subsidiaries of the same parent, Omega Ltd, both before and after Epsilon acquires its interest. Omega's control is not transitory. Epsilon acquires its interest in the joint operation, which is a business. Which accounting applies to this acquisition?

Appendix C of Ind AS 103 applies. When all parties sharing joint control are under the same ultimate controlling party before and after the acquisition, and that control is not transitory, the usual acquisition-method rules for joint operation interests do not apply.

  1. AAcquisition-method principles of Ind AS 103 applied in full, with goodwill at fair value
  2. BExpensing the entire consideration paid to profit or loss
  3. CAccounting specified in Appendix C of Ind AS 103 for common control business combinationsCorrect
  4. DRecognition at fair value with a gain on bargain purchase

Explanation

Para B33D states that the acquisition-method requirements of paras 21A and B33A to B33C do not apply when all parties sharing joint control are under the same ultimate controlling party before and after the acquisition and control is not transitory. Appendix C of Ind AS 103 applies instead. The full acquisition method is therefore wrong.

Did you get it right without looking?

One question tells you little. A timed set on Accounting and Reporting of Joint Operation shows your real accuracy, how long you take and where you lose marks.

Practise Accounting and Reporting of Joint OperationFree diagnostic mock

More Accounting and Reporting of Joint Operation questions