Combined Business - IFRS 3

In the year company A need to recognise 80% of 60 k which is 48lk. If 6k is not for any specific purpose than another 4.8 k he need to recognise

Hi Amit.

USD 60000 is nothing but share capital of USD 20000+ retained earning of USD 40000.

The Company A has acquired 80% Non Controlling Interest in Company B in FY 09.

As per IFRS 3 prior to attaining control in the acquiree company , the investment must be accounted for according to IAS 39, IAS 28 or IAS 31 as appropriate.

Considering the application of IAS 39 appropriate in the given case, during FY 09 the investment must be accounted for at 80% of ( share capital of B $20000 + retained earnings of $ 30000 ) i.e $40000 should be recognised as Investment - Fair Value through Profit & Loss account. Subsequently during FY 10 since the value has gone up and the fair value in FY10 is 80%  of ( 20000+40000+6000) = $52800, hence $52800 - $40000 = $12800 should be recognised in the income statement and investment increased accordingly. Again it is assumed that $6000 is a General Purpose Reserve.

Pls note the accounting will get changed on attaining control in Company B.

i think now its clear to u