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CMA Intermediate · Corporate Accounting and Auditing · Presentation of Financial Statements (Ind AS 1)

Sagar Infra Ltd. acquired a business in the year and recognised a bargain purchase gain under Ind AS 103. While preparing the statement of changes in equity, the accountant asks how Ind AS 1 treats the reconciliation of each component of equity. Which statement is correct?

The reconciliation of each equity component under Ind AS 1 must include disclosure of the recognition of bargain purchase gain arising on a business combination. Paragraph 106(d)(iv) was amended to align with Ind AS 103, so omitting it would be wrong.

  1. AThe reconciliation need not mention bargain purchase gain, as it is only a business combination matter
  2. BInd AS 1 reconciliation of each component of equity includes disclosure of recognition of bargain purchase gain arising on business combination, in line with Ind AS 103Correct
  3. CBargain purchase gain is shown only as other comprehensive income, outside the equity reconciliation
  4. DThe reconciliation between opening and closing carrying amount of each equity component is required only under IAS 1

Explanation

Paragraph 106(d)(iv) of Ind AS 1 was amended so that the reconciliation of the opening and closing carrying amount of each component of equity includes the recognition of bargain purchase gain on a business combination, consistent with Ind AS 103. This differs from IAS 1, and the reconciliation itself is required under Ind AS 1.

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