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

Under the pooling of interests method in Appendix C of Ind AS 103, Meru Ltd (transferee) absorbs Nila Ltd (transferor), both under common control. Nila Ltd's assets have a carrying amount of ₹9,00,000 and a fair value of ₹12,00,000. Which statement is correct?

The assets are recorded at their carrying amount of ₹9,00,000. Under the pooling of interests method, assets and liabilities are reflected at carrying amounts, with no fair value adjustments or new assets recognised, other than adjustments to harmonise accounting policies.

  1. AAssets are recorded at ₹12,00,000 and the excess is credited to capital reserve
  2. BAssets are recorded at ₹9,00,000 with no fair value adjustments, except to harmonise accounting policiesCorrect
  3. CAssets are recorded at ₹12,00,000 and goodwill is recognised on the difference
  4. DAssets are recorded at ₹9,00,000 and a new intangible asset is recognised for the ₹3,00,000 difference

Explanation

Under pooling, assets and liabilities are reflected at carrying amounts. No adjustments are made for fair values or to recognise new assets or liabilities; only harmonisation of accounting policies is permitted. So ₹9,00,000 is used.

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