Question
On 1 January 2022, Wacken Limited acquired all the issued shares in Latitude Limited. At that date, the land of Latitude Limited had a fair
On 1 January 2022, Wacken Limited acquired all the issued shares in Latitude Limited. At that date, the land of Latitude Limited had a fair value of $40 000 more than its carrying amount in Latitude Limiteds financial statements. It was sold for $150,000 cash and Latitude Limited will record a gain on sale of $30,000. The land was sold to external parties on 31 December 2023. The tax rate is 30%. The business combination valuation entries in relation to Latitude Limiteds sale of land for the year ending 30 June 2024 will include:
a.
Dr Loss on Sale $ 30,000
Cr Income Tax Expense $ 9000
Cr Transfer from BCVR $ 21,000
b.
Dr Gain on Sale $ 40,000
Cr Income Tax Payable $ 15,000
Cr Transfer from BCVR $ 35,000
c.
None of the other options
d.
Dr Gain on Sale $ 30,000
Cr Income Tax Expense $ 9000
Cr Transfer from BCVR $ 21,000
e.
Dr Cash $ 150,000
Cr Land $ 100,000
Cr Gain on Sale $ 50,000
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