169 / 236
167
annual
report
20
16-17
kajaria
ceramics
corporate
overview
management
reports
Financial
statements
aggregate of the consideration transferred measured at acquisition date fair value and the amount of any noncontrolling
interests in the acquiree. For each business combination, the Group elects whether to measure the noncontrolling interests
in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred. At the acquisition date, the identifiable assets acquired and the liabilities
assumed are recognised at their acquisition date fair values. For this purpose, the liabilities assumed include contingent
liabilities representing present obligation and they are measured at their acquisition fair values irrespective of the fact that
outflow of resources embodying economic benefits is not probable. However, the following assets and liabilities acquired
in a business combination are measured at the basis indicated below:
• Deferred tax assets or liabilities, and the assets or liabilities related to employee benefit arrangements are recognised and
measured in accordance with Ind AS 12 Income Tax and Ind AS 19 Employee Benefits respectively.
• Liabilities or equity instruments related to share based payment arrangements of the acquiree or share – based payments
arrangements of the Group entered into to replace share-based payment arrangements of the acquire are measured in
accordance with Ind AS 102 Share-based Payments at the acquisition date.
• Assets (or disposal groups) that are classified as held for sale in accordance with Ind AS 105 Non-current Assets Held for
Sale and Discontinued Operations are measured in accordance with that standard.
• Reacquired rights are measured at a value determined on the basis of the remaining contractual term of the related
contract. Such valuation does not consider potential renewal of the reacquired right.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the
acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business
combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and
any resulting gain or loss is recognised in profit or loss or OCI, as appropriate.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent
consideration classified as an asset or liability that is a financial instrument and within the scope of Ind AS 109 Financial
Instruments, is measured at fair value with changes in fair value recognised in profit or loss. If the contingent consideration
is not within the scope of Ind AS 109, it is measured in accordance with the appropriate Ind AS. Contingent consideration
that is classified as equity is not re-measured at subsequent reporting dates and subsequent its settlement is accounted for
within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and
liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the
Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews
the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in
an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised
in OCI and accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity
recognises the gain directly in equity as capital reserve, without routing the same through OCI.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the
Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
A cash generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when
Notes on the consolidated financial statements
for the year ended 31 March 2017