Page 92 - Topic 1 - 1.3. Business Combinations
P. 92
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Solution
• COMMENT
• The land will be recognised as investment property in the
separate financial statements of Minnie Ltd, as it was
acquired for investment purposes. The fair value adjustment
and the deferred tax adjustment was thus recognised in profit
or loss.
• Since the land is rented by Mickey Ltd (parent), it now
becomes owner occupied property, plant and equipment in
the group financial statements. The fair value adjustment and
deferred tax adjustment recognised in profit or loss by Minnie
Ltd must thus be reversed.
• It is the group accounting policy to measure land in
accordance with the revaluation model. The increase in fair
value of R150 000 must thus be recognised in other
comprehensive income, net of deferred tax.
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