MISVALUED AND UNRECORDED ASSETS AND LIABILITIES Mensa Ltd has acquired all the shares of Careers Ltd. The accountant for Mensa Ltd, having studied the requirements of AASB 3/IFRS 3 Business Combinations, realises that all the identifiable assets and liabilities of Careers Ltd must be recognised in the consolidated financial statements at fair value. Although she understands the need to revalue items recorded by the subsidiary at carrying amounts different from fair value and to recognise previously unrecorded assets or liabilities at fair value, she is unsure of a number of matters associated with accounting for these assets and liabilities. She has approached you and asked for your advice. Required Write a report for the accountant at Mensa Ltd advising on the following issues. 1. Should the adjustments to fair value be made in the consolidation worksheet or in the accounts of Careers Ltd? 2. What equity accounts should be used when revaluing or recognising assets and liabilities? 3. Do these equity accounts remain in existence indefinitely, since they do not seem to be related to the equity accounts recognised by Careers Ltd itself? CASE STUDY