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

Meera Steels Ltd acquires a business and recognises a bargain purchase gain under Ind AS 103. The CFO asks where this gain features in the Ind AS 1 equity reconciliation. Also, the controller assumes Ind AS 1 retains all IAS 1 transition paragraphs 139 to 139M. Which statement is correct?

The bargain purchase gain is disclosed in the component-of-equity reconciliation under paragraph 106(d)(iv), as amended to align with Ind AS 103. Transition and effective date paragraphs 139 to 139M are not included in Ind AS 1, being irrelevant in India.

  1. ABargain purchase gain is shown in the reconciliation under paragraph 106(d)(iv) of Ind AS 1; the transition paragraphs 139 to 139M are not included in Ind AS 1Correct
  2. BBargain purchase gain is excluded from the reconciliation; transition paragraphs 139 to 139M are included
  3. CBargain purchase gain is taken to profit or loss only and never to equity; transition paragraphs are included
  4. DBargain purchase gain is shown in the reconciliation, and paragraphs 139 to 139M are included as they apply in India

Explanation

Paragraph 106(d)(iv) was amended to require disclosure regarding recognition of bargain purchase gain in the reconciliation of each component of equity, in line with Ind AS 103. Paragraphs 139 to 139M (and 139O-139P) on transition and effective date are not included because they are not relevant in the Indian context, though some numbers are retained.

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