a). Advise how are assets that are acquired, and liabilities that are assumed, are measured in a business combination? (2 marks)

b). Define the term gain on bargain purchase and how it is this accounted for in a business combination. (2 marks)

c). On 1 October 2021, Zimplats Holdings acquired all the assets and liabilities of Nickel Mines Ltd issuing 200,000 shares to acquire these net assets. The fair value of Nickel Miness assets and liabilities at this date were: Cash $600,000 Furniture and fittings 320,000 Accounts receivable 80,000 Plant 800,000 Accounts payable 160,000 Current tax liability 88,000 Provision for annual leave 32,000 The financial year for Zimplats Holdings is 1 October 2021 to 30 September 2022.

Required:

i). Prepare the journal entries for Zimplats Holdings to record the business combination at 1 October 2021, assuming the fair value of each Zimplats Holdings share at acquisition date is $8.20. (4 Marks)

ii). Prepare the journal entries for Zimplats Holdings to record the business combination at 1 October 2021, assuming the fair value of each Zimplats Holdings share at acquisition date is $7.40.