Describe the Accounting Effects of a Reverse Acquisition

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The Answer is Accounting for a reverse acquisition affects only the consolidated financial statements of the group resulting from the business combination.Reverse acquisition accounting applies to the allocation of the cost of the business combination on the date of acquisition and to the adjustments
eliminating the investment asset against pre-acquisition equity acquired.In allocating the cost of the business combination,the fair values of the assets,liabilities and contingent liabilities of the legal parent and acquiree must be recognised.The assets and liabilities of the legal subsidiary and acquirer are measured at their carrying amounts immediately before the business combination and are not restated to fair value.The treatment of transactions occurring after the commencement of the business combination follows the usual consolidation procedures.

Describe the Accounting Effects of a Reverse Acquisition

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