Breeze Limited Acquired Zephyr Limited for a Purchase Consideration of $140

question 14

Multiple Choice

Breeze Limited acquired Zephyr Limited for a purchase consideration of $140 000. At acquisition date the fair value of Zephyr Limited's furniture asset was $40 000 and the carrying amount was $35 000. If the company tax rate is 30%, which of the following is the appropriate adjustment to recognise the tax effect of the business combination revaluation of furniture at acquisition date?

• A) DR Deferred tax asset $3 500
• B) CR Deferred tax asset $3 500
• C) DR Deferred tax liability $3 500
• D) CR Deferred tax liability $3 500

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Definitions:

Intradermal Injection

A method of administering medication by injection just below the skin, typically used for allergy testing and vaccinations.

Needle

A slender, pointed instrument typically made of metal, used for sewing, puncturing, or injecting.

Incubation Period

The interval between exposure to infection and the appearance of the first symptom.

Rubeola Measles

A highly contagious viral infection characterized by a red skin rash; also known simply as measles.