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

Under Appendix C of Ind AS 103, which method is required for accounting a business combination involving entities under common control, and how are the assets and liabilities of the combining entities measured?

Common control combinations use the pooling of interests method under Appendix C of Ind AS 103. Assets and liabilities of the combining entities are reflected at carrying amounts, with no fair value adjustments or new assets or liabilities, except to harmonise accounting policies.

  1. AAcquisition method, with assets and liabilities at fair value
  2. BPooling of interests method, with assets and liabilities at carrying amountsCorrect
  3. CPooling of interests method, with assets and liabilities at fair value
  4. DAcquisition method, with assets and liabilities at carrying amounts

Explanation

Appendix C requires business combinations under common control to be accounted for using the pooling of interests method. Under it, assets and liabilities of the combining entities are reflected at their carrying amounts, and no fair value adjustments are made. Options with fair value or the acquisition method contradict this.

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