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CMA Final · Corporate Financial Reporting · Accounting and Reporting of Joint Operation

Three companies belonging to the same group, all under the common control of the same ultimate parent both before and after the deal and with that control not transitory, share joint control of a joint operation that is a business. One of them acquires an interest in it. Which accounting applies to this acquisition under Ind AS 111?

The Ind AS 103 Appendix C accounting for common control business combinations applies. Ind AS 111 excludes the usual acquisition accounting where all joint controlling parties, including the acquirer, are under the same ultimate controller before and after, and the control is not transitory.

  1. ABusiness combination accounting under Ind AS 103 at fair value, recognising goodwill
  2. BThe Ind AS 103 Appendix C accounting for common control business combinationsCorrect
  3. CRecognition of the interest as a financial asset at fair value
  4. DNo accounting entry until the joint operation is wound up

Explanation

The requirements for acquisitions of interests in joint operations that are businesses do not apply where all parties sharing joint control, including the acquirer, are under common control of the same ultimate controlling party both before and after, and that control is not transitory. Ind AS 111 then requires the accounting in Appendix C of Ind AS 103. Fair value acquisition accounting is therefore wrong.

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