Ind as 110

Does pre and post acquisition profit is there in Ind as 110
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Quick Summary
Ind AS 110 clarifies the treatment of pre and post-acquisition profits when a subsidiary is acquired. If control is obtained from the entity's formation, there's no need to distinguish between pre and post-acquisition profits. However, if control is gained later, acquisition accounting applies, recognising fair values of assets and liabilities at the acquisition date, with any subsequent profits recorded in the profit and loss account.

There may be two scenarios:

A. The control of the Entity (i.e. subsidiary) is from the day it is formed i.e. from the date of purchase

B. The control of the Entity (i.e. subsidiary) is obtained at a later date i.e. purchased at a later date.

- In case of Case A, since the entity is subsidiary from day 1, there is no need to have bifurcation b/w Pre and post acquisition profits.

- In case of Case B, The acquisition method of accounting will be applied. In this Method the acquirer shall recognize fair value of assets and liabilities in acquiree. The difference between fair value of asset less liabilities assumed (-) Investment amount will be recognised as goodwill on the date of acquisition. Any post  acquisition profits will be recognised thereafter thru profit and loss account.

 

Trust the above clarifies.

Yes there is concept of pre and post acquisition profits in IND AS 110, and if the dividend is distributed by subsidiary from pre acquisition reserves/profits then parent's share is deducted from the consolidated reserves and NCI share is deducted from calculation of NCI

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