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CMA Final · Corporate Financial Reporting · Business Combination under Common Control

Gamma Ltd and Delta Ltd are both wholly owned subsidiaries of Omega Ltd. Gamma Ltd takes over the whole business of Delta Ltd. Consider these statements: (P) The transaction is a transfer of businesses between entities within a group. (Q) The transaction is outside Ind AS 103 because the acquirer is not an outside party. (R) Pooling of interests is the required method. Which combination is correct under Ind AS 103 Appendix C?

Only P and R are correct. A transfer of a business between group entities is a common control business combination, and Ind AS 103 Appendix C requires the pooling of interests method. Statement Q is wrong because such combinations are dealt with within Ind AS 103 through Appendix C.

  1. AP and R only are correctCorrect
  2. BQ and R only are correct
  3. CP and Q only are correct
  4. DP, Q and R are all correct

Explanation

Appendix C says common control business combinations include transfers of subsidiaries or businesses between entities within a group, so P is correct. Appendix C also requires pooling of interests for such combinations, so R is correct. Q is wrong because common control combinations are dealt with in Appendix C of Ind AS 103 and are not excluded from it.

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