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

Himalaya Infra Ltd acquired a business and recognised a bargain purchase gain under Ind AS 103. The finance head asks how this gain should be reflected in the reconciliation of the carrying amount of each component of equity at the beginning and end of the period. Which statement is correct under Ind AS 1?

Ind AS 1 amends paragraph 106(d)(iv) so the equity reconciliation includes disclosure of recognition of bargain purchase gain arising on a business combination, in line with Ind AS 103. It differs from IAS 1 in this respect, so a separate disclosure is needed.

  1. AInd AS 1 is identical to IAS 1 here, and no separate disclosure of bargain purchase gain is required
  2. BThe bargain purchase gain is shown only in the Statement of Profit and Loss, with no equity disclosure
  3. CParagraph 106(d)(iv) is amended to include disclosure of recognition of bargain purchase gain arising on business combination, consistent with Ind AS 103Correct
  4. DThe gain is deducted from retained earnings in the reconciliation

Explanation

Appendix 1 states that paragraph 106(d)(iv), dealing with the reconciliation of each component of equity, has been amended to include disclosure of the recognition of bargain purchase gain on business combination, in line with Ind AS 103. So it is not identical to IAS 1. Option four reverses the direction; the text provides no such deduction.

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