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Business Combinations - Ind AS Implementation Challenges

A business is an integrated set of activities and assets that is capable of being conducted or managed for the purpose of providing return in the form of dividends, lower costs or other economic directly to investors or other owners, members or participants.<br>

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Business Combinations - Ind AS Implementation Challenges

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  1. FINPRO CONSULTING Business Combinations - Ind AS Implementation Challenges

  2. Agenda • Scope and definitions • Acquisitions accounting • Common control business combinations • Implementation challenges

  3. Business A business is an integrated set of activities and assets that is capable of being conducted or managed for the purpose of providing return in the form of dividends, lower costs or other economic directly to investors or other owners, members or participants.

  4. Acquisition Accounting NON-CONTROLLING INTEREST (NCI) FAIR VALUE OF NET IDENTIFIABLE ASSETS CONSIDERATION TRANSFERRED GOODWILL OPTION TO MEASURE NCI AT ACQUISITION RATE

  5. STEPS TO ACQUISITION ACCOUNTING Step 1: Identify the acquirer Step 2: Determine the acquisition date Step 3: Identify and measure consideration transferred Step 4: Identify and measure identifiable net assets Step 5: Measure non-controlling interest (NCI) Step 6: Determine goodwill or gain on a bargain purchase Step 7: Recognise any measurement period adjustments

  6. Step 1: Identify the acquirer Step 2: Determine the acquisition date The acquisition date is the date on which acquirer obtains control of acquiree The acquirer is the entity that obtains control of the business

  7. Step 3: Identify and measure consideration transferred Step 4: Measure identifiable net assets Consideration transferred is measured at fair value at the acquisition date and includes assets transferred, liabilities incurred to previous owners and equity instruments issued The two identifiable net assets are recognition and measurement

  8. Step 5: Measure NCI

  9. Step 6: Determine goodwill or gain on bargain purchase Option 1: NCI measured at fair value CONSIDERATION TRANSFERRED Fair value of net identifiable assets GOODWILL NCI at FV Option 2: NCI measured at their proportionate interest in identifiable net assets NCI based on net assets GOODWILL Fair value of net identifiable assets CONSIDERATION TRANSFERRED

  10. Step 7: Recognise any measurement period adjustments Measurement period is period after acquisition date when entity can adjust preliminary business combination accounting

  11. Common Control Business Transactions Common control business combination means a business combination involving entities or businesses in which all the combining entities or businesses are ultimately controlled by the same party or parties before and after the business combination, and that control is not transitory.

  12. Implementation Challenges

  13. THANKS! FinPro Consulting Kshitij, Yashashree Colony No. 1, Off Cummins College Road, Karvenagar, Pune 411 052 +91 7030190888 +91 7030197888

  14. You can find us at info@finproconsulting.in http://www.finproconsulting.in

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