X Co has issued 1000 ordinary shares to the shareholders of Y Co in order to...
X Co has issued 1000 ordinary shares to the shareholders of Y Co in order to acquire the whole of share capital of Y Co. Which of the following is applicable to this transaction
O IFRS 2 Share - Based Payment
O IFRS 3 Business Combinations
O IFRS 9 Financial Instruments
OIAS 28 Investments in Associates and Joint Ventures
Homework Answers
Correct asnwer is ''IFRS 3 Business combination''
IFRS 3 is applied on transactions in which a business takes control of one or more business.It could be merger or acquisition.
So in the given case since X co acquire 1,000 ordinary shares of Y Co which is th whole capital of Y Co, which means it took control and this transaction is a business combination and IFRS 3 is applicable to transaction.
IFRS 9 is applicable when there is a purchase or sale of Financial assets and liabilities, such as Bonds,shares which does not account for control in a company and does not have significant influence.
IFRS 28 is applied on transaction which involve purchase of stake in company without a control but with significant influence.
& IFRS 2 Shre-bAsed payment is applied to account for ESOPS Granted to employees or any other payment in nature of equity to any stakeholders.
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