On 1 October 2022, Shikipisha, a listed company, purchased 90% of the ordinary shares of Allan. Allan, which ceased trading one week prior to the share purchase, owns a manufacturing facility comprising of land and buildings as well as related equipment. The fair value of the land and buildings is similar to the fair value of the equipment. The acquisition of Allan only gained legal approval on the basis that all employees who worked at the facility are retained. There are no other assets, including any inventories, or processes transferred as part of the sale. Shikipisha proposes to account for the purchase of Allan as a business combination.
On 1 October 2022, Shikipisha, a listed company, purchased 90% of the ordinary shares of Allan. Allan, which ceased trading one week prior to the share purchase, owns a manufacturing facility comprising of land and buildings as well as related equipment. The fair value of the land and buildings is similar to the fair value of the equipment. The acquisition of Allan only gained legal approval on the basis that all employees who worked at the facility are retained. There are no other assets, including any inventories, or processes transferred as part of the sale. Shikipisha proposes to account for the purchase of Allan as a business combination.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On 1 October 2022, Shikipisha, a listed company, purchased 90% of the ordinary
shares of Allan. Allan, which ceased trading one week prior to the share purchase,
owns a manufacturing facility comprising of land and buildings as well as related
equipment. The fair value of the land and buildings is similar to the fair value of the
equipment. The acquisition of Allan only gained legal approval on the basis that all
employees who worked at the facility are retained. There are no other assets, including
any inventories, or processes transferred as part of the sale. Shikipisha proposes to
account for the purchase of Allan as a business combination.
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