Accounting for Capital Reduction14/10/2022 0 By indiafreenotes
Common control business combinations will include transactions, such as transfer of subsidiaries or businesses, between entities within the group.
Business combinations involving entities or businesses under common control shall be accounted for using the pooling of interests method.
Pooling of Interest method involve:
- The assets and liabilities of the combining entities are reflected at their carrying amounts (No clarity if carrying amount to be considered of SFS or CFS)
- No adjustments are made to reflect fair values, or recognise any new assets or liabilities
- Financials of prior periods should be restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination
- If business combination had occurred after that date, the prior period information shall be restated only from that date
- Consideration may consist of securities, cash or other assets. Securities issued should be recorded at nominal value. Assets other than cash should be measured at fair value.
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