Johnson Limited Estimated the Net Present Value of Future Cash

question 9

Multiple Choice

Johnson Limited estimated the net present value of future cash flows from specialised Plant acquired under a business combination to be $30 000. A replacement cost for the Plant is estimated to be $33 000. The Plant has been independently appraised at a value of $31 000. A similar item of Plant cost the acquirer $29 000 the previous year. What is the fair value for recognition of the Plant under a business combination?

• A) $29 000
• B) $30 000
• C) $33 000
• D) $31 000.

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