CA Final · Financial Reporting · Ind AS 111 Joint Arrangements
Sigma Ltd, Tau Ltd and Sigma's parent Omega Ltd are under common control of the same ultimate controlling party both before and after Sigma acquires an interest in a joint operation, and that control is not transitory. Sigma's interest is in a joint operation that constitutes a business. Per the Appendix 1 comparison of Ind AS 111 with IFRS 11, which accounting applies to this acquisition under Ind AS 111?
Appendix C of Ind AS 103, Business Combinations under Common Control, applies, as paragraph B33D refers. This differs from IFRS 11, which excludes such cases because IFRS 3 does not deal with common control combinations. The main-body acquisition method does not apply when the common control is not transitory.
- AAppendix C Business Combinations under Common Control of Ind AS 103, as referred to in paragraph B33DCorrect
- BAcquisition accounting under Ind AS 103 main body at fair value, as for any other business
- CInd AS 28 equity method, since common control implies significant influence
- DNo special accounting; the interest is expensed immediately
Explanation
Appendix 1 notes that paragraph B33D refers to the accounting in Appendix C of Ind AS 103 for acquiring an interest in a joint operation when the parties sharing joint control, including the acquirer, are under common control of the same ultimate controlling party both before and after, and control is not transitory. IFRS 11 excludes this because IFRS 3 does not deal with common control combinations. The main-body acquisition method is therefore wrong here.
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