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

Which of the following is a business combination achieved without the transfer of consideration, to which the acquisition method still applies under Ind AS 103?

An acquiree repurchasing enough of its own shares so that an existing investor obtains control is a business combination without transfer of consideration. Ind AS 103 requires the acquisition method for it. Other listed examples include lapse of minority veto rights and combinations by contract alone.

  1. AThe acquiree repurchases enough of its own shares for an existing investor to obtain controlCorrect
  2. BAn entity buys a single machine from another entity for cash
  3. CTwo entities under common control combine and issue shares at nominal value
  4. DAn entity forms a joint venture by contributing cash and receiving shares

Explanation

Ind AS 103 lists a buyback by the acquiree that gives an existing investor control as a business combination without consideration, accounted for under the acquisition method. Buying a machine is not a business combination, and common control deals use pooling of interests.

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