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

Orion Infra Ltd acquired a business in the current year and recognised a bargain purchase gain under Ind AS 103. The CFO asks how this affects the Statement of Changes in Equity disclosures. Which statement is correct under Ind AS 1 as described in its comparison with IAS 1?

The reconciliation of each component of equity must disclose the bargain purchase gain. Ind AS 1 amended paragraph 106(d)(iv) to include recognition of such a gain arising on a business combination, in line with Ind AS 103, so Orion Infra must show it in that reconciliation.

  1. ANo equity disclosure is needed because the gain is recognised in profit or loss
  2. BThe reconciliation of each component of equity must include disclosure of the bargain purchase gain recognised under Ind AS 103, per the amended paragraph 106(d)(iv)Correct
  3. CThe gain is shown only in the notes to the business combination, not in the equity reconciliation
  4. DThe gain is disclosed only in the equity reconciliation of the acquiree

Explanation

Paragraph 106(d)(iv) of Ind AS 1 was amended so the reconciliation between opening and closing carrying amount of each component of equity includes recognition of bargain purchase gain arising on a business combination, consistent with Ind AS 103. The other options deny this specific disclosure.

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