This edition of the Accounting and Auditing Update (AAU) begins a new series on business combinations by examining the accounting and valuation considerations associated with Purchase Price Allocation (PPA) under Indian Accounting Standard (Ind AS) 103, Business Combinations. As merger and acquisition activity continues to evolve in scale and complexity, organisations are increasingly expected to assess the financial reporting implications of transactions well before deal completion. The chapter highlights how decisions relating to the identification and valuation of acquired assets and liabilities, particularly intangible assets, can have a lasting impact on future earnings, goodwill balances, impairment assessments and stakeholder communication. It also underscores the growing importance of integrating accounting, valuation, tax and deal perspectives throughout the transaction lifecycle, reflecting the broader market focus on transparency, governance and value creation in acquisition accounting.
This edition also examines the accounting treatment of consideration payable to customers under Ind AS 115, Revenue from Contracts with Customers, an area that continues to attract attention as commercial arrangements become increasingly sophisticated. Payments linked to customer acquisition, promotion, platform visibility, marketing and distribution arrangements often take diverse forms, making it essential for organisations to assess their economic substance rather than relying solely on contractual descriptions. The chapter explores the distinction between payments that represent consideration payable to customers and those made in exchange for distinct goods or services, highlighting the potential impact on reported revenue, margins and key performance indicators. As businesses continue to innovate in their go-to-market strategies, robust evaluation frameworks, appropriate documentation and effective controls remain critical to ensuring consistent and transparent revenue recognition outcomes.
This edition further discusses significant regulatory updates such as Prudential norms and income recognition framework for Specified Non-Financial Assets and amendments to Pillar 3 disclosure framework issued by Reserve Bank of India (RBI), informal guidance issued by the Securities and Exchange Board of India (SEBI) on listing requirements for acquired debt securities, sale of unlisted equity shares, and non-banking finance activities by stock brokers, Ind AS amendments issued by the Ministry of Corporate Affairs (MCA) and other updates from the Insurance Regulatory and Development Authority of India (IRDAI), Ministry of Environment, Forest and Climate Change, National Financial Reporting Authority and others. We would be delighted to receive feedback or suggestions from you on the topics we should cover in the forthcoming editions of the AAU.
For more information on this update, please write to aaupdate@kpmg.com.
