Johnson Limited Estimated the Net Present Value of Future Cash

question 5

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 last 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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Definitions:

Federal Government

The national government of a federal country that shares power with states or provinces but has authority in matters of national concern.

Subject to Taxation

Describes income, goods, property, and other financial transactions that are considered taxable by the government.

Manufacturing Plant

A manufacturing plant is a large industrial facility where goods are produced through the combination of labor, machines, and processing of raw materials.

Certificate of Authority

A document issued by a state government granting a foreign business entity permission to conduct business in that state.