Prepare business combination report.

RONIN Company, a prominent industry player, is strategically acquiring BLIC Inc., a smaller but innovative firm, in a move that promises to enhance RONIN's market position. RONIN wants to grow and expand across Canada and internationally. RONIN intends to seek additional financing by way of a share issuance within the next $3$ years. The acquisition involves acquiring a diverse range of assets and liabilities, including identifiable intangible assets, and is governed by the International Financial Reporting Standards $($IFRS$).$

RONIN is acquiring all of the assets and liabilities $($except for cash of $$10M)$ of BLIC, effective from the start of the $2024$ fiscal year. BLIC possesses an array of assets and liabilities, with tangible assets, identifiable intangible assets, and various liabilities. RONIN paid for the net assets as follows:

$$80$ million cash.

$$20$ million long term debt paying interest at $4\%$ annually for $5$ years. The current market rate of interest is $6\%.$

$1,000,000$ common shares in RONIN. The market price at the start of the $2024$ fiscal year is $$30/$ share. The day that the two companies reached an agreement, the share price was $$25/$ share. RONIN paid an underwriter $$500,000$ for the share issuance.

BLIC owns manufacturing facilities and equipment with a net book value of $$20$ million. RONIN's valuation team suggests a fair value of $$26$ million due to recent technological upgrades. RONIN is very interested in the equipment since it believes it can be used for RONIN products as well as BLIC products. The equipment is more advanced technologically. Recent industry catalogues show a value for the equipment of approximately $$30$ million.

BLIC carries inventory at $$5$ million on its books, but RONIN's valuation reflects a fair value of $$6$ million. The inventory was subsequently sold for $$4$ million on January $1,2024.$

BLIC holds patents, trademarks, and customer relationships with a net book value of $$10$ million. RONIN's valuation experts suggest a fair value of $$19$ million for these assets. The patents have a carrying value of $$8$ million. A recent appraisal has indicated a fair value of $$10$ million for the patents. RONIN will use most of the patents and estimates that they have a remaining useful life of $3$ years. The trademarks have a carrying value of $$2$ million and the tax department recently valued them at $$1$ million. RONIN does not expect much future value to these trademarks. The customer relations have not been recognized on the financial statements of BLIC but RONIN believes there is a fair value of $$8$ million. BLIC has developed important clients all over the world, particularly in countries where entry is difficult. RONIN plans to use these relationships to expand into these countries.

BLIC has outstanding loans of $$12$ million and accounts payable totaling $$8$ million. RONIN's valuation, determines a fair value of $$6$ million on the loans since they are at low interest rates. Additionally, a contingent liability related to a legal dispute is estimated at $$2$ million. The lawyers estimate that there is only a $10\%$ probability that BLIC will need to pay anything.

As the accountant advising RONIN on the financial statement reporting treatment of the acquisition, your tasks are to navigate IFRS guidelines and provide recommendations for presenting these values in the RONIN financial statements post$-$acquisition. See Exhibit I for additional information to help you in your tasks.

Exhibit $1$

Financial Statements

RONIN Company's pre$-$acquisition balance sheet:

Total Assets: $$300$ million

Total Liabilities: $$120$ million

Shareholders' Equity: $$180$ million

BLIC Inc.$\text{'}$s pre$-$acquisition balance sheet:

Total Assets: $$50$ million

Total Liabilities: $$20$ million

Shareholders' Equity: $$30$ million