On 1 July 2015, Monageng Limited concluded an agreement to purchase 75% of the ordinary shares in Selongo Limited. The terms of the purchase agreement include, among other things, the following: Monageng Limited will settle for the 75% of the ordinary shares by paying cash of R200 000 in addition to issuing 100 000 of its own 10% preference shares to the owners of the 75% ordinary shares on 30 September 2015. The price of the10% preference shares on 30 September 2015 was R2.50 each.Monageng Limited will only be able to appoint its directors to the board of Selongo Limited on 1 August 2015 after the year end date of Selongo Limited which is on 31 July 2015.All the ordinary shares of Selongo Limited are entitled to vote at the company’s AGM but preference shares are not entitled to vote. What is the acquisition date of this business combination?Select one:a. 1 July 2015b. 30 September 2015c. 1 August 2015d. 1 October 2015

The day that the acquirer gains control of the acquiree is the date that IFRS 3 considers to be the…

Answered: On 1 July 2015, Monageng Limited…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On 1 July 2015, Monageng Limited concluded an agreement to purchase 75% of the ordinary shares in Selongo Limited. The terms of the purchase agreement include, among other things, the following:

Monageng Limited will settle for the 75% of the ordinary shares by paying cash of R200 000 in addition to issuing 100 000 of its own 10% preference shares to the owners of the 75% ordinary shares on 30 September 2015. The price of the10% preference shares on 30 September 2015 was R2.50 each.
Monageng Limited will only be able to appoint its directors to the board of Selongo Limited on 1 August 2015 after the year end date of Selongo Limited which is on 31 July 2015.

All the ordinary shares of Selongo Limited are entitled to vote at the company’s AGM but preference shares are not entitled to vote.

What is the acquisition date of this business combination?

Select one:

a. 1 July 2015

b. 30 September 2015

c. 1 August 2015

d. 1 October 2015

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