(i) Keeping the data of Example 5 and inserting the following provision, show how it should be recognized by HL.

(ii) The fair value of assets can be assessed on the date of business combination but it has been included in the scheme of business combination that the proper estimation of fair value of assets acquired and liabilities assumed will be complete by the end of September, 2011.

Data from Example 5

By taking the data of Example 4, assume that the clause (iv) is replaced with the clause “HL is to issue additional number of shares if market price of its shares falls below ₹21 by the end of financial year 2011–12 to keep the value of shares issued at the initial level.” Then show how contingent consideration is to be recognized.

Data from Example 4

The balance sheets of Hanging Limited (HL) and Flat Limited (FL) on 31st March, 2011 are as follows:

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Liabilities Equity shares of face value* 10 each General reserve P & La/c Creditors Bills payable Balance Sheet as on 31st March, 2011 HL 1,50,000 63,000 39,000 36,000 12,000 3,00,000 FL 30,000 15,000 12,750 13,800 9,000 80,550 Assets Land and building Plant and machinery Stock Debtors Investment Bills receivables Bank Cash (rupees in crores) FL 25,500 15,000 6,000 20,250 HL 1,05,000 75,000 30,000 45,000 30,000 3,000 9,000 3,000 3,00,000 - 4,500 7,500 1,800 80,550