Skip to content

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

Himalaya Foods Ltd is 90% owned by Parent P Ltd, and Deccan Snacks Ltd is 55% owned by the same Parent P Ltd. The remaining shares of each are held by outside investors. Deccan Snacks is merged into Himalaya Foods. Which statement is correct under Appendix C of Ind AS 103?

It is a common control combination. Ind AS 103 Appendix C says the extent of non-controlling interests in the combining entities before and after is irrelevant, because a partially-owned subsidiary remains under the parent's control. Both entities are controlled by the same parent.

  1. AIt is not a common control combination because Himalaya Foods has a higher non-controlling interest percentage than Deccan Snacks
  2. BIt is a common control combination only if non-controlling interests are identical before and after the merger
  3. CIt is a common control combination, because the extent of non-controlling interests before and after is not relevant as a partially-owned subsidiary is still under the parent's controlCorrect
  4. DIt is a common control combination only if the non-controlling shareholders consent in writing

Explanation

Appendix C states that the extent of non-controlling interests in each combining entity before and after the combination is not relevant, since a partially-owned subsidiary is nevertheless under the parent's control. Both entities are controlled by Parent P Ltd, so the pooling of interests method applies.

Did you get it right without looking?

One question tells you little. A timed set on Business Combination under Common Control shows your real accuracy, how long you take and where you lose marks.

Practise Business Combination under Common ControlFree diagnostic mock

More Business Combination under Common Control questions