As we had seen in the previous blog, that mergers and acquisitions are becoming more and more common as entities aim to achieve their growth objectives. IFRS 3 / Ind AS 103 provides a detailed guidance on accounting for business combinations. Upon recognising identifiable net assets acquired in business combination, their measurement is critical issue which shall be based on the purchase price allocation. Few practical challenges in measuring the net assets are discussed below: Measurement of acquired net assets IFRS 3 / Ind AS 103 requires identifiable assets acquired and liabilities assumed  to be measured at their acquisition-date fair values.  The acquisition date fair value will be deemed as cost. Fair value is defined as the amount that would be received to sale an asset or would be paid to transfer a liability, in an orderly transaction between market participants on a measurement date. The fair value of identifiable assets acquired and liabilities assumed...

    Introduction Mergers and acquisitions are becoming more and more common as entities aim to achieve their growth objectives other than in an organic way. IFRS 3 / Ind AS 103 – Business combinations transform the way companies plan and execute their acquisition strategies. This standard applies to most of business combinations, including amalgamations/ mergers and acquisitions. This standard lays down the principles of accounting for business combinations by way of acquisitions or mergers. Ind AS also provides guidance on a combination of entities or businesses under common control. However, IFRS does not provide guidance on combinations under common control. The companies that engage in business combination transactions face various challenges in accounting and financial reporting of such transactions, including: 1. Accounting for purchase consideration transferred by acquirer and other transaction costs incurred in the transaction. 2. Recognition and measurement of the net...

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  Impact on accounting for financial instruments due to Interest Rate Benchmark Reform (IRBR) Overview By the end of year 2021, some major interbank offer rates such as LIBOR, EURIBOR, TIBOR will cease to be published and will be replaced by new interest rate benchmarks. This poses challenges for accounting of broad range of financial products and contracts which use these interbank offer rates as benchmarks. To address these challenges amendments have been made by IASB to the relevant IFRS’ and in India, corresponding changes have been made to Ind AS’. The amendments are issued to provide guidance on accounting of financial instruments during the phase of transitioning to new benchmarks (pre replacement phase) and after the replacement of existing interbank offer rates with new rates (replacement phase). This document aims to summaries the amendments and explain their practical applicability by way of an example. What is Interest Rate Benchmark Reform? Interest rate benchmarks (IR...

  In the previous blog of the series on  IPO reporting , we evaluated the accounting framework applicable for the IPO. Accordingly, the issuer company shall prepare restated consolidated financial information to be presented in the offer document based on reporting framework in which they have prepared their latest financial statements before filing the offer document. Even if the latest financial statements are in  Indian GAAP, SEBI  has provided an option to issuer company to adopt Ind AS to restate the financial statements for all three years. Per our view, the issuer company shall opt for the Ind AS reporting framework for the restated financial statements as it reduces time, costs, and efforts of the Company. The company could execute Ind AS restatement as well as IPO restatement at the same time by removing duplication of efforts which otherwise would be performed at different times. In this blog, we will analyze the nature of adjustments required to prepare ‘C...