When an Entity is being acquired by another Entity, it has two way to look at it, first being 100% acquired where all controlling rights will be with Parent Entity only, another could be where the control is less than 100% which arises a situation to have another interested party who has rights in the Investee but it is not a controlling interest.
It loosely call it as Minority Interest also where the holder/s of these portion of voting rights do not have controlling interest in the Investee.
Now,
At initial recognition, the Standard provides a policy choice to measure such non-controlling interest portion either at proportion of the fair value of net assets identified for the purpose of Ind-As 103- Business combination accounting OR at fair value (only that non-controlling portion).
Let’s first refer the relevant guidance over such concept and then we will take an example to understand the concept-
Ind-As 103 – Business Combinations
Para -19 – “For each business combination, the acquirer shall measure at the acquisition date components of non-controlling interest in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation at either:
(a) fair value; or
For further reading please refer - http://gyanifrs.com/2017/05/non-controlling-interest-nci-initial-measurement-policy-choice-available/
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It loosely call it as Minority Interest also where the holder/s of these portion of voting rights do not have controlling interest in the Investee.
Now,
At initial recognition, the Standard provides a policy choice to measure such non-controlling interest portion either at proportion of the fair value of net assets identified for the purpose of Ind-As 103- Business combination accounting OR at fair value (only that non-controlling portion).
Let’s first refer the relevant guidance over such concept and then we will take an example to understand the concept-
Ind-As 103 – Business Combinations
Para -19 – “For each business combination, the acquirer shall measure at the acquisition date components of non-controlling interest in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation at either:
(a) fair value; or
For further reading please refer - http://gyanifrs.com/2017/05/non-controlling-interest-nci-initial-measurement-policy-choice-available/
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