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CA Final · Financial Reporting · Ind AS 12 Income Taxes

Kaveri Industries Ltd acquires a business under Ind AS 103 and recognises a bargain purchase gain. The accountant wants to know why paragraph 68(a) of Ind AS 12 differs from IAS 12. What is the reason given in the comparison with IAS 12?

Paragraph 68(a) of Ind AS 12 is modified because Ind AS 103 accounts for bargain purchase gain differently from IFRS 3. It is not a deletion, and it has nothing to do with the Ind AS 40 fair value model, which affects paragraphs 20 and 51E.

  1. AInd AS 12 does not allow deferred tax on business combinations at all
  2. BInd AS 103 treats bargain purchase gain differently from IFRS 3, so paragraph 68(a) has been modifiedCorrect
  3. CParagraph 68(a) was deleted to match the numbering of IAS 12
  4. DParagraph 68(a) was modified because Ind AS 40 disallows the fair value model

Explanation

The comparison states that paragraph 68(a) is modified as a consequence of the different treatment of bargain purchase gain in Ind AS 103 as against IFRS 3. The fair value model reason relates to paragraphs 20 and 51E, not 68(a). Paragraph 68(a) is not among the deleted paragraphs.

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