Reference no: EM131177377

The following information is relevant:

(i) At the date of acquisition, Zanda Co conducted a fair value exercise on Medda Co's net assets which were equalto their carrying amounts (including Medda Co's financial asset equity investments) with the exception of an itemof plant which had a fair value of $2·5 million below its carrying amount. The plant had a remaining useful lifeof 30 months at 1 October 2015.The directors of Zanda Co are of the opinion that an unrecorded deferred tax asset of $1·2 million at 1 October2015, relating to Medda Co's losses, can be relieved in the near future as a result of the acquisition. At 31 March2016, the directors' opinion has not changed, nor has the value of the deferred tax asset.

(ii) Zanda Co's policy is to value the non-controlling interest at fair value at the date of acquisition. For this purpose,a share price for Medda Co of $1·50 each is representative of the fair value of the shares held by the noncontrollinginterest.

(iii) At 31 March 2016, Medda Co held goods in inventory which had been supplied by Zanda Co at a mark-up oncost of 35%. These goods had cost Medda Co $2·43 million.