When Wayne Ltd Acquired 100% of the Share Capital of Carol

question 44

Multiple Choice

When Wayne Ltd acquired 100% of the share capital of Carol Ltd, the carrying amount of Carol Ltd's machinery was $200 000. The fair value of the machinery on acquisition date was $160 000. The company tax rate was 30%. What is the amount of the business combination valuation reserve that will be recognised on consolidation?

• A) $40 000
• B) $12 000
• C) $28 000
• D) $160 000

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Definitions:

Average Total Costs

The overall expense of creating goods divided by the number of items produced.

Output

The quantity of goods or services produced by a firm, industry, or economy within a specified period.

Total Costs

The sum of all expenses a firm incurs in producing a product or offering a service, including both fixed and variable costs.

Total Variable Costs

The sum of all costs that vary with output level, including materials, labor, and other expenses that change with production volume.