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A Comparative Analysis under Ind AS and IFRS (Standalone vs Consolidated Financial Statements) 1. Introduction In mergers and acquisitions, companies often incur a range of transaction-related costs such as legal fees, due diligence expenses, and advisory charges. A critical accounting question ar
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FAQ :
Acquisition-related costs include expenses incurred during mergers and acquisitions, such as legal fees, due diligence expenses, advisory charges, stamp duty, and valuation fees.
In standalone financial statements, acquisition-related costs are generally capitalized when the cost method is used. However, if the investment is classified as Fair Value Through Profit or Loss (FVTPL), these costs are expensed. If using the financial instruments approach (Ind AS 109/IFRS 9) for FVTOCI or Amortised Cost, transaction costs are included in the carrying amount.
Under Ind AS 103 / IFRS 3, all acquisition-related costs in consolidated financial statements must be expensed in the period they are incurred. This includes legal, advisory, and due diligence fees.
Yes, costs related to issuing debt or equity instruments are an exception and are accounted for under Ind AS 32 / IFRS 9, typically adjusted against equity, rather than expensed immediately.
Yes, the same cost can be capitalized in standalone financial statements (using the cost method) but must be expensed in consolidated financial statements.
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