On 1 July Walter Ltd Acquired 100% of the Share

question 46

Multiple Choice

On 1 July Walter Ltd acquired 100% of the share capital of Kristoff Ltd. At that date, the carrying amount of Kristoff Ltd's machinery was $300 000. The fair value of the machinery on acquisition date was $330 000. The company tax rate was 30%. What is the amount of the business combination valuation reserve that will be recognised on consolidation?

• A) $21 000
• B) $30 000
• C) $33 000
• D) $9 000

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Definitions:

Financial Ratios

Quantitative measures derived from financial statements used to assess a company's performance, financial health, and value.

Current Ratio

An indicator measuring a corporation's potential to handle its short-term financial obligations with assets on hand.

Common Size

A financial analysis technique that expresses each line item in a financial statement as a percentage of a base figure, aiding in comparison across different financial periods or companies.

Financial Statements

Documents that provide an overview of a company's financial condition in both short and long term, including balance sheet, income statement, and cash flow statement.