BUSINESS COMBINATION TUTORIAL QUESTIONS 1. Perth Berhad is a company that was hurt by a recent global financial crisis. As a result, it experienced major trading difficulties. It previously obtained a significant loan from Fremantle Bank, and when Perth Berhad was unable to make its loan repayments, the bank made an agreement with Perth Berhad to become involved in the management of that company. Under the agreement between the two entities, the bank had authority for spending within Perth Berhad. Perth Berhad's managers had to obtain authority from the bank for acquisitions over RM10 000, and was required to have bank approval for its budgets. Determine whether a parent-subsidiary relationship exists, and which entity, if any, is a parent required to prepare consolidated financial statements under IFRS 10. 2. Limas Berhad acquired the assets and liabilities of Heri Berhad on 1 July 2016. These net assets measured at fair value consisted of: 3. Required: Equipment Land Trucks Current assets Current liabilities RM 50,000 80,000 40,000 10,000 (16,000) a) Prepare the journal entries in Limas Berhad to record this business combination assuming that, to acquire these net assets, the company issued 100,000 shares at RM1.80 per share. b) Prepare the journal entries in Limas Berhad to record this business combination assuming that, to acquire these net assets, the company issued 100,000 shares at RM1.60 per share