Question: Bass Ltd has recently undertaken a business combination with Bream Ltd. At the start of negotiations, Bass Ltd owned 30% of the shares of Bream Ltd. The current discussions between the two entities concerned Bass Ltd's acquisition of the remaining 70% of shares of Bream Ltd. The negotiations began on 1 January 2016 and enough shareholders in Bream Ltd agreed to the deal by 30 September 2016. The purchase agreement was for shareholders in Bream Ltd to receive in exchange shares in Bass Ltd. Over the negotiation period, the share price of Bass Ltd shares reached a low of $5.40 and a high of $6.20.

The accountant for Bass Ltd, Mr Spencer, knows that AASB 3 has to be applied in accounting for business combinations. However, he is confused as to how to account for the original 30% investment in Bream Ltd, what share price to use to account for the issue of Bass Ltd's shares, and how the varying dates such as the date of exchange and acquisition date will affect the accounting for the business combination.

Required

Provide Mr Spencer with advice on the issues that are confusing him.