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Example 3

The document outlines various examples related to business combinations, including issuing shares, determining consideration, and measuring identifiable net assets. It discusses goodwill calculations, contingent liabilities, and the elimination of intragroup transactions. Additionally, it includes specific scenarios involving asset valuations and dividend declarations within a corporate structure.

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2 views1 page

Example 3

The document outlines various examples related to business combinations, including issuing shares, determining consideration, and measuring identifiable net assets. It discusses goodwill calculations, contingent liabilities, and the elimination of intragroup transactions. Additionally, it includes specific scenarios involving asset valuations and dividend declarations within a corporate structure.

Uploaded by

russell.tapu
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

OFFICIA

Example 3.1 Issuing shares and deferred consideration 206


Example 3.2 Determining consideration transferred: contingent consideration 207
and transactions accounted for separate from the business combination
Example 3.3 Recognising and measuring identifiable net assets 210
Brand
IPR&D
Example 3.4 Recognising and measuring identifiable net assets: contingent liability - 211
Legal / Claim
Example 3.5 Calculating goodwill with NCI: full and partial goodwill methods 213-
214
Example 3.6 Calculating goodwill with NCI: full and partial goodwill methods 215
Example 3.7 Measurement period adjustments 217
Example 3.8 Business combination valuation reserve: brand name. 223-
The brand name has been assessed as having a ten-year useful life. 224
Example 3.9 Business combination valuation reserve: contingent liability 225
The contingent liability is an ongoing lawsuit relating to a workplace injury
that occurred in February 20X0. The plaintiff is seeking $500,000 in
damages. At acquisition date, Burung would
have needed to pay $300,000 (which would be tax deductible) for a third
party to assume responsibility in respect of this claim.
Example 3.1 Business combination valuation reserve: full goodwill 226
0
Example 3.1 Elimination of investment asset (gain from a bargain purchase) 227-
1 228
Example 3.1 Elimination of investment asset: full and partial goodwill 227-
2 228
Example 3.1 Elimination of intragroup sales and purchases 232
3 Pride and Skein make purchases from each other based on terms of cost
plus 20%. The intragroup purchases during the past two financial years are
as follows:
Example 3.1 Elimination of unrealised profit in inventory 233
4
Example 3.1 Elimination of unrealised profit on transfer of a truck 234-
5 Pride sold a truck to Skein on 31 March 20X2. The carrying amount of the 235
truck was $600,000 in the books of Pride (cost of $800,000 less
accumulated depreciation of $200,000). The truck was sold for its
independently determined fair value of $750,000. It is estimated that the
truck has a remaining useful life of five years at the date of transfer.
Example 3.1 Elimination of intragroup dividends 237
6 Pride Limited (Pride) acquired a 100% interest in Skein Limited (Skein) on 1
July 20X0.
On 25 June 20X1, Skein declared a dividend of $200,000, which was paid
on 15 July 20X1.
On 30 June 20X1, Pride declared a dividend of $300,000, which was paid on
31 July 20X1.
Example 3.1 Prepare and record NCI allocations 240-
7 241
Illustratio 3.1 CGU impairment test for a 60% owned subsidiary with goodwill 242
n

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