Forrest Ltd Acquired 100% of the Share Capital of Desert

question 34

Multiple Choice

Forrest Ltd acquired 100% of the share capital of Desert Ltd when the carrying value of Desert Ltd's equipment was $75 000. The fair value of the equipment on acquisition date was $90 000. The company tax rate was 30%. What is the amount of the business combination valuation reserve that must be recognised on consolidation?

• A) $15 000
• B) $10 500
• C) $3 500
• D) $90 000

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