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

Two subsidiaries of Bharat Holdings Ltd, X Ltd and Y Ltd, share joint control of a joint operation. X Ltd acquires an interest in the joint operation. Bharat Holdings controls both before and after the acquisition, and that control is not transitory. How should X Ltd account for this acquisition?

X Ltd applies Appendix C of Ind AS 103. Where all parties sharing joint control are under the same ultimate controlling party before and after the acquisition, and the control is not transitory, the usual business combination acquisition rules for joint operation interests do not apply.

  1. AApply the acquisition accounting in paragraphs 21A and B33A to B33C of Ind AS 111 fully
  2. BApply Appendix C of Ind AS 103 relating to common control business combinationsCorrect
  3. CRecognise the acquired interest only at fair value through profit or loss
  4. DDefer recognition until the joint operation resells assets to a third party

Explanation

Paragraph B33D states that paragraphs 21A and B33A to B33C do not apply when all parties sharing joint control, including the acquirer, are under common control of the same ultimate controlling party both before and after the acquisition, and the control is not transitory. For such transactions, Appendix C of Ind AS 103 applies. Here Bharat Holdings is the common controller, so Appendix C applies.

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