Use the Following Information to Answers

question 16

Multiple Choice

Use the following information to answers
Edward Ltd acquires all issued shares in Jacob Ltd for $220 000 paid in cash. Equity of Jacob Ltd consists of $130 000 share capital and $45 000 retained earnings. At acquisition date, Jacob Ltd owns a block of land, which it initially purchased at $200 000. The fair value of the land is $240 000. The carrying amount of Jacob Ltd's property, plant and equipment is $130 000 with accumulated depreciation of $55 000. The fair value of the property, plant and equipment is $95 000.
-If the tax rate is 30%, what would be the amount of Business Combination Value Reserve that must be recognised at the acquisition date?

• A) $42 000
• B) $45 000
• C) $52 500
• D) $60 000

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Definitions:

Communication

The process of exchanging information, ideas, thoughts, and feelings through verbal or non-verbal means.

Lateral

Pertaining to the side; often used to describe movements, positions, or transfers from one side to another.

Vertical

describes the hierarchical structure of an organization from top level management down to front-line employees, highlighting levels of authority.

Network Design

The planning and structuring of a computer network to meet specific needs and objectives, including layout, technologies, and strategies.