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Effect on Cost of Control when Bonus Issue is from Post Acquisition Profits

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Dhruv Kumar

23 Points Posted on 06 February 2026

ICAI CA Inter - AS 21 Consolidated Financial Statements

CASE - Bonus Issue from Post acquisiton Profits (ILLUSTRATION 9)

Link - https://resource.cdn.icai.org/74712bos60485-inter-p1-cp10-u1.pdf

While calculating cost of control share capital is increased but I think it is wrong because as per AS 21 we take the share capital at the date of acquisition and if the bonus issue is after the date of acquisiton, then we shouldn't increase the share capital.

Please correct me with reasoning !

Replies (2)

Quick Summary

Under AS 21, bonus issue from post-acquisition profits only reclassifies reserves into share capital without changing net assets. Hence, cost of control (goodwill) remains unaffected despite increase in share capital for presentation.

Aashok Kumar Sharma

Finance/Compliance Consultant

73860 Points Posted on 07 February 2026

Under AS 21, goodwill is based on net assets at acquisition date. A bonus issue from post-acquisition profits only reallocates equity between reserves and share capital without changing total net assets. Therefore, share capital increases for presentation, but cost of control remains unaffected.