AusCo is in the business of manufacturing furniture and has an annual turnover of $2 billion. In this income year, it intends to pay $30 million to acquire a competitor, comprising of the following items:

Production equipment: $10 million; and
Registered design: $20 million.
You are required to advise the company of its income tax implications of the above proposed transaction. You are NOT required to compute the amount of capital allowance. Refer to relevant case law and sections in the ITTA in your response.