P3.3 Determining the consideration transferred During January 20x5, P Co performed due diligence tests on $\mathrm{S}$ Co. On 1 February 20x5, P Co completed the purchase of $80 \%$ of $\mathrm{S} \mathrm{Co}$ from $\mathrm{V} \mathrm{Co}$, the existing owner of $\mathrm{S} \mathrm{Co}$. The following expenditures were incurred by P Co during January $20 \times 5$ : Payment to consultants to conduct due diligence checks on S Co Number of ordinary shares issued by P Co to V Co Fair value per share of $\mathrm{P}$ Co at date of share issue, reliably measured........ Salary of business development manager of P Co for January $20 \times 5 \ldots$ Travelling and hotel expenses incurred by the business development manager in relation to the acquisition of $\mathrm{S}$ Co Undiscounted cash payment payable to $\mathrm{V}$ Co at the end of five years Interest payable to $\mathrm{V}$ Co for deferred payment. ... Legal fees to execute sales agreement with $\vee \mathrm{Co}$ Assumption of the liabilities of $\mathrm{V}$ Co ( $\mathrm{P}$ assumes legal obligation to pay off the short-term liabilities of $\mathrm{V}$ Co in settlement of purchase price) Stamp duties and other incidentals of share issue to $\mathrm{V} \mathrm{Co}$ Details relating to $\mathrm{SCO}$ as at 1 February 20x5: Share capital... Retained earnings ........... Other reserves.... As reported in the interim financial statements of S Co Fair value of unrecognized intangible asset.... $\$ 200,000$ $6,000,000$ $\$ 3$ $\$ 20,000$ $\$ 15,000$ $\$ 1,000,000$ $6 \%$ per annum $\$ 30,000$ $\$ 200,000$ $\$ 10,000$ (a) Estimated useful life of intangible asset from 1 February $20 \times 5$ was five years. (b) Fair value of non-controlling interests as at 1 February $20 \times 5$ was $\$ 4,700,000$. (c) The financial year-end is 31 December. Tax rate is $20 \%$. Recognize tax effects on fair value adjustments. Required: 1. Determine the consideration transferred in accordance with IFRS 3 Business Combinations. 2. Show the journal entry or entries in P's books to record the expenditures incurred by P Co in $20 x 5$. 3. Show partial consolidation entries for the year ended 31 December $20 \times 5$.

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