Precisely the date of acquisition is a date when the

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Precisely, the date of acquisition is a date when the acquirer transfers all its assets and liability which has to be recognized based on fair values for accounting and tax purposes. So, it is not wrong to say that, the legal date is an acquisition date when
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the business activities are resumed by the acquirer or asset and liability is overtaken by the acquirer.
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PART B: Acquisition Analysis at 1 July 2018 Net fair value of identifiable assets and identifiable liabilities Equity $ 328,000 Share Capital $ 185,000 Asset revaluation Surplus $ 64,000 General Reserve $ 79,000 Inventory ($ 142000-79000) (1-30%) $ 63000 $ 44,100 Vehicle ($ 333000-185000) (1-30%) $ 1,48,000 $ 103,600 Land ($286000-159000) (1-30%) $ 1,27,000 $ 88,900 Net Fair value acquired $ 564,600 Consideration transferred $ 529,458 Profit and Loss Account ( Bargain Purchase) $ 35,142 The same is bargain purchase. As the consideration transferred is more than the net fair value acquired of assets, therefore the resulting gain will be transferred to profit and loss account and will be considered as bargain purchase. XJournal Entries In the books of Amla group Ltd at 30th june 2019 Amount in $ Particulars Amount Dr. Amount Cr. Vehicle Account Dr. 111000 Deferred Tax liabilty Account Cr. 33300 Reserve for Valuation of Business Combination Cr. 77700 (Being Vehicle is recorded on fair value) Depreciation Expense Dr 29600 Accumulated Depreciation Cr 29600 (1/5)*(333000-185000) = 29600 (Being Depreciation is charged on difference of fair value and carrying amount) Deferred tax Liability Dr 8880 Income tax expenses Cr 8880 (Deferred tax liabilty transferred to Income tax expenses account) Land Dr 127000 Deferred tax Liabilty Cr 38100 Reserve for Valuation of Business Combination Cr 88900 (Being appreciation in land recorded at fair value) Inventory Dr 3780 Deferred tax Liabilty Cr 1134 Reserve for Valuation of Business Combination Cr 2646
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(Being Increase in inventory) Cost of Sales Dr 59220 Income tax expenses Cr 17766 Reserve for Valuation of Business Combination Cr 41454 (Sale of Inventory) Reserve for Valuation of Business Combination Dr 35142 Profit and Loss Account Cr 35142 (Gain from Net Asset more than Consideration transferred recorded) Deferred tax Liability Dr 72534 Income tax expenses Cr 72534 (Deferred tax liabilty transferred to Income tax expenses account) Income Tax Expenses Dr 72534 Gain Cr 72534 X Pre Acquisition Entries Amount in $ At 1/07/2015 Amount Dr. Amount Cr. Asset Revaluation reserve Dr 64000 Share Capital Dr 185000 General Reserve Dr 79000 Reserve for Valuation of Business Combination Dr 201458 Shares in Davis Ltd Cr 529458 (Being above items adjusted against capital) Transfer from business combination valuation reserve Dr 41454 Reserve for Valuation of Business Combination Cr 41454 (Sale of Inventory) Transfer from general reserve Dr 140000 General reseve Cr 140000 (Transfer of asset surplation reserve to general reserve) References AASB. (2015). financial instrument. Australia: AASB.
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AASB. (2015). IFRS 2 Share Based payment. Victoria: Australian Governement. AASB. (2016). Fair Value . AASB . Australian Accounting Standard Board. (2015). Business Combnation - AASB 3. Victoria: Australian Government. Grant Thorton. (2015). IFRS 3 Business Combination. Fact Sheet , 1-15. IFRS. (2016). IFRS 3 - Business Combination. Victoria: AASB.
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