The standard defines contingent consideration as, an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met.
Published in Chapter:
Advent of IND-AS 103 and Its impact on Mergers and Acquisitions: A Case Analysis
Deepak Tandon (International Management Institute, Delhi, India), Naliniprava Tripathy (Indian Institute of Management, Shillong, India), and Neelam Tandon (Jagannath International Management School, India)
Copyright: © 2020
|Pages: 23
DOI: 10.4018/978-1-7998-2372-8.ch012
Abstract
In the business growth models in the corporate scenario, mergers and acquisitions is the key buzzword. Entrepreneurs with a paucity of cash balance and various motives for their poor performance are key targets of mergers. Consolidation of the market share at times leading to competitive advantage with inorganic opportunities to growth seems to be the pace of the era. When it comes to financial consolidation, balance sheet analysis plays a complicated role. In order to improve reliability, relevance in business combinations, IND-AS103 plays a vital role. IND-AS is applicable to the companies with a net worth of Rs 250 Crs, otherwise companies GAAP is applicable. An attempt has been made by the authors through the Idea and Vodafone merger explaining the recognition of identifiable assets, liabilities assumed, and the NCI (non-controlling interest) as per the guidelines of IND-AS103. Through a case, the authors have emphasized the recognition of goodwill acquired in the entrepreneurial enterprise derived from the bargain price.