H Ltd. acquires 90% of shares of S Ltd. for ₹ 8,20,000. Fair value of S Ltd.'s identifiable assets is ₹…
The bargain-purchase gain on a proportionate-share measurement is ₹ 2,60,000. S Ltd.'s identifiable net assets are ₹ 15,00,000 − ₹ 3,00,000 = ₹ 12,00,000. H Ltd.'s 90% share…
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H Ltd. acquires 90% of shares of S Ltd. for ₹ 8,20,000. Fair value of S Ltd.'s identifiable assets is ₹ 15,00,000 and of identifiable liabilities is ₹ 3,00,000. Gain on bargain purchase is:
Answer and explanation
Correct answer A
The bargain-purchase gain on a proportionate-share measurement is ₹ 2,60,000. S Ltd.'s identifiable net assets are ₹ 15,00,000 − ₹ 3,00,000 = ₹ 12,00,000. H Ltd.'s 90% share is ₹ 10,80,000, which exceeds the ₹ 8,20,000 consideration by ₹ 2,60,000.
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West Bengal SET (WB SET)