On 1 July 2020 King Limited obtained control of Gizzard Limited by acquiring six million shares in Gizzard. Gizzard has eight million issued share. The purchase consideration comprised the following:

$5 million cash to be paid in two instalments. A first instalment of $4 million is due on 1 July 2020 and the remainder is due on 1 July 2021.

The issue of three shares in King for every four shares acquired in Gizzard. King’s share price at 1 July 2020 was $2 per share.

King’s incremental borrowing rate is 9%.

What is the value of the consideration transferred, in accordance with IFRS 3 Business Combinations?

	A.	$16,917,400.
	B.	$17,000,000.
	C.	$13,917,400.
	D.	$14,000,000

Answer rating: 100% (QA)

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