Final PN-18 Corporate Financial Reporting Quiz 3

1.                  is a method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the investors share of the investees net assets.

2. A joint arrangement is either a                 or a joint venture

3.                 - is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control

4. As per Ind AS 112: Disclosure of Interests in Other Entities, an entity shall disclose information about significant judgements and assumptions it has made (and changes to those judgements and assumptions) in determining               

5. Ind AS 103 states that the acquirer obtaining control over acquiree, recognises and measures in its consolidated financial statements at the acquisition date                

6. An investment entity is an entity that       

7.                                   requires that when consolidated financial statements are prepared the investor company shall also prepare individual/standalone financial statements, which are named as separate financial statements    .

8. Consolidated financial statements are required to be prepared by an Ind AS complied company if it holds shares in the investee company                .

9. At what value is non-controlling interest recorded in the books of the Acquiree at the time of a business combination transaction under Ind AS 103?

10. Ind AS 103 has a wider scope than

11. When after business combination, acquiree ceases to exist, it is to be recorded in the books of the                in one set only, in its stand-alone accounts.

12. As per Ind AS 103, accounting and reporting for business combination is done under           .

13. How is non-controlling interest shown in the financial statements of the acquirer at the time of a business combination under Ind AS 103?

14. The pooling of interest method is considered to involve which the following?

15. A Ltd. acquires 80% shares of B Ltd. for Rs.12,80,000. Fair Value (FV) of B Ltd.’s net assets at time of acquisition amounts Rs.14,80,000. Non-Controlling Interests are recognized at fair value. Compute Non-Controlling Interests.

16. On 1 January 2023 P Ltd. acquires 80 per cent of the equity interests of Q Ltd. by issue of equity shares of paid-up value of Rs.50 Lakhs (market value Rs.120 Lakhs). The identifiable assets are measured at Rs.190 Lakhs and the liabilities assumed are measured at Rs.30 Lakhs. Non-controlling Interest is measured at proportionate net asset value. Compute the amount of Gain on Bargain Purchase.

17. On 1 January 2023 M Ltd. acquires 80 per cent of the equity interests of P Ltd. by issue of equity shares of paid-up value of Rs.200 Lakhs (market value Rs.480 Lakhs). The identifiable assets are measured at Rs.760 Lakhs and the liabilities assumed are measured at Rs.120 Lakhs. Compute Non-controlling Interest if measured at proportionate net asset value.

18. Entity A acquired 35 % of Entity B on 01.04.2023 for Rs. 35,000. On 31.03.2024, fair value of shares of Entity B is Rs. 42,000, thus Rs.7,000 reported under OCI in 2023-24. On 01.07.2020 Entity A further acquired 40% stake in Entity B. Consideration paid is Rs. 60,000.

Entity A identifies the net assets of Entity B at fair value of Rs. 1,20,000 at the acquisition date, value 35% shares at Rs. 45,000. NCI is valued at proportionate net assets. Compute the total amount to be transferred to P&L A/c of Entity A.

19. D Ltd. has acquired 100% of the equity of F Ltd. on March 31, 2023. The purchase consideration comprises of an immediate payment of Rs.10 lakhs and two further payments of Rs.1.21 lakhs if the Return on Equity exceeds 20% in each of the subsequent two financial years. A discount rate of 10% is used. Compute the value of total consideration at the acquisition date.

20. On 01.04.2020 Gold Ltd. acquired 75% share of Coal Ltd. at Rs.10,80,000, when the fair value of its net assets was 1000000. During 01.4.2022 to 31.3.2023 Coal Ltd made TCI Rs. 2,00,000. On 31.3.2023 Gold Ltd. purchased 15% holding from outsiders at Rs.2,20,000. Compute gain/loss credited/debited to Other Equity.

21. On 01.04.2020 Gold Ltd. acquired 75% share of Coal Ltd. at Rs.10,80,000, when the fair value of its net assets was Rs.10,00,000. During 01.4.2022 to 31.3.2023 Coal Ltd. made TCI Rs. 2,00,000. On 31.3.2023 Gold Ltd. purchased 15% holding from outsiders at Rs.2,20,000. Compute NCI at Proportionate net asset value.

22. As per Ind AS 103, while accounting and reporting for business combination goodwill is calculated as     .

23. On March 31, 201X, A Ltd absorbed B Ltd. A Ltd. issued 60,000 equity shares (Rs.10 par value) that were trading at Rs.25 on March 31. The book value of B’s net assets was Rs.12,00,000, Equity Share Capital Rs.5,00,000 and Other Equity Rs.7,00,000 on March 31. The fair value of net assets of B Ltd. was assessed at Rs.13,00,000.

24. Q Ltd. acquired a 60% interest in R Ltd. on January 1, 2023. Q Ltd. paid Rs. 900 Lakhs in cash for their interest in R Ltd. The fair value of R Ltd.’s assets is Rs. 2,000 Lakhs, and the fair value of its liabilities is Rs. 1,000 Lakhs. If NCI is valued at proportionate net asset, value of Goodwill:

25. A Ltd. takes over B Ltd. for Rs. 12,60,000. Fair Value (FV) of B’s net assets at time of acquisition amounts Rs. 11,80,000. Calculate Goodwill.