Question

1. A Ltd acquires all the net assets of B Ltd and applies the requirements of AASB 3 Business Combinations. Details regarding the net assets of B Ltd are as follows:

   	Carrying amount	Fair value
   	$	$
   Assets
   Cash	50,000	50,000
   Furniture	20,000	15,000
   Fittings	40,000	20,000
   Accounts receivable	25,000	20,000
   Goodwill	10,000	10,000
   Liabilities
   Accounts payable	20,000	20,000

   Assume A Ltd issues 100,000 shares at $1.50 each to acquire the net assets of B Ltd. The acquisition analysis would disclose the fair value of the identifiable net assets of B Ltd and the consideration transferred as:

   		'Fair value of identifiable net assets' $85,000 'Consideration transferred' $100,000
   		'Fair value of identifiable net assets' $95,000 'Consideration transferred' $150,000
   		'Fair value of identifiable net assets' $85,000 'Consideration transferred' $150,000
   		'Fair value of identifiable net assets' $125,000 'Consideration transferred' $100,000

Answer 1

	Calculation of Fair value of Net assets
	Cash	$50,000
	Furniture	$15,000
	Fittings	$20,000
	Account Receivable	$20,000
	Goodwill	$10,000
Less:	Accounts Payable	$20,000
	Net Assets Acquired	$95,000
	Consideration Paid =10,000 shares*$1.50 =$150,000
	So Option B is answer