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CMA Final · Corporate Financial Reporting · Accounting for Business Combination and Restructuring

Under Appendix C of Ind AS 103, Transferee Ltd issues equity shares of face value ₹10 each, whose fair value is ₹45 each, to acquire a business under common control. How are these shares recorded as consideration?

Securities issued as consideration in a common control business combination are recorded at nominal value, so the shares are recorded at ₹10 each. Fair value applies only to non-cash assets other than securities used as consideration, not to the shares issued.

  1. AAt fair value of ₹45 each
  2. BAt nominal value of ₹10 eachCorrect
  3. CAt book value per share of the transferor
  4. DAt the average of face and fair value

Explanation

Appendix C states that securities issued as consideration shall be recorded at nominal value. Fair value is used only for assets other than cash given as consideration. So the ₹45 fair value is irrelevant for the shares.

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