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Editorial Board on Accounts and Audit
  • Impact on EPS of DTA recognition due to merger.

    by Ajay on Tuesday, June 11, 2019 at 02:55 PM

    How to calculate earning per share. 1.From 1st April 2018 merger happened with common control entity. 2.After Merger company recognized DTA. 3.As per IND AS 103, if merger is between common control entities than comparative financial to be prepared. 4. Our question is that should we consider DTA recognized in current year for earning per share of previous year.

    Replied byEditorial Board Saturday, June 15, 2019 at 05:52 PM

    As per Appendix C of Ind AS 103, Business Combinations, business combinations of two or more commonly controlled entities shall be accounted for using the pooling of interests method. Under this method, the accounting is done retrospectively. The acquirer entity’s financial statements of prior periods are restated as if the business combination had occurred from the beginning of preceding period presented along with the current year’s financial statements. Consequently, the amount of deferred tax asset of prior periods is also restated and its impact shall be given to EPS of that prior period itself.

    Accordingly, in your case, the impact of DTA created in current year shall be given to only current year’s EPS, and not of previous year’s.

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