By September 20X4, all the lantana has been eradicated from Freelands to the satisfaction of the inspector from Africania’s Ministry of Tourism. The Africans operations are generating a profit significantly in excess of the Bilkersens’ expectations and Makeit’s forecast. Consequently, the Bilkersens decide to expand Open Safari’s African operations further. The introduction of elephant-back safaris in March 20X4 allows Open Safari to significantly increase the price of its Africanian safaris in response to the unexpectedly high demand for that service.

Acquisition of WoXy Safari’s assets and businesses

On 2 January 20X4 Open Safari acquires all of the assets and businesses of WoXy Safaris at public auction for ZAR30 million.3 Open Safari also retained all of WoXy Safari’s staff. The founding owner-manager and sole shareholder of WoXy Safaris (Mr. Lucky) disposed of WoXy Safaris to fund his retirement. WoXy Safaris operates in the ecotourism and agribusiness sectors on land it owns in South Africa. That land, which is securely fenced, is the sole remaining habitat of the endemic quagga (Equus quagga). The quagga is a subspecies of the common zebra (Equus quagga) and was, until its rediscovery by Mr. Lucky about a decade ago, thought to be extinct. WoXy Safari’s profitable ecotourism business allows tourists to observe the world’s only quaggas in their natural habitat in a one-hour elephant-back safari. The elephant-back safaris are marketed under the registered ‘WoXy’ brand name. WoXy Safari’s profitable agribusinesses comprise a premium badger-friendly honey production business and sustainable exotic pine plantations. The main reason for Open Safari acquiring WoXy Safaris is to obtain its herd of quaggas and its ten safari-trained elephant bulls. Following the acquisition, the elephants are immediately relocated to Freelands using a military helicopter provided at no cost to Open Safari by the government of Africana. The relocation assistance is provided in accordance with that government’s ecotourism development support programme. Prior to the auction, the Bilkersens estimate the fair values of WoXy Safari’s tangible assets as follows:

	ZAR
Lands and all plants (including pine trees) growing on it	20,000,000
Quaggas (herd: 30 mature + 10 immature)	4,000,000
Elephants (‘herd’: 10 mature bulls)	2,500,000
500 active beehives	500,000
Total tangible assets	27,000,000

Open Safari also continues to operate WoXy Safari’s South African agribusinesses.

In February 20X4, Open Safari relaunches the modified South African ecotourism business using the WoXy brand—offering horseback quagga safaris using a herd of 20 horses that it acquired at a cost of ZAR200,000 in a separate acquisition from an independent third party.

Contract to sell timber

In late 20X4 Open Safari entered into a contract to sell, on 31 December 20X9, a specified significant quantity of sawn pine logs at a fixed price.

QUESTION

What judgments and estimates are made when measuring the identifiable assets acquired, the liabilities assumed and any non-controlling interest in WoXy Safari (and the associated goodwill) at initial recognition?

Answer rating: 100% (QA)

In any business combination net identifiable assets represent the subsidiarys total assets minus its ... View the full answer