In business combination, even the assets in subsidiary's balance sheet are in carrying amount and later on provided fair value, we only record the fair value regardless the tax effect on them (as revaluation of the assets, tax effect should rise because revaluation changes carrying amount, not tax base, and new carrying amount should be the fair value)

In consolidation, there are business combination valuation entries to deal with revaluation issues (tax effect and BCVR).



Why do we treat them differently? Why don't we consider tax effect in business combination as well?

Thanks

BTW, I am in Australia. So this question is based on Australian Accounting Standard, which means the International Accounting Standard.

What do YOU think ?
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It's not homework. When I was reading textbook, I came up with this question. I discussed with one of my classmates, he didn't know the answer.

The only reasons I think should be that there is no revaluation in Business Combination, or during business combination, the acquirer took over all their assets and liabilities, and DTL, DTA don't account under some accounting standard.

Count*

In such a situation, the business combination is not a separate taxable entity, hence tax effect is ignored.

In such a situation, the business combination is not a separate taxable entity, hence tax effect is ignored.

Thanks rehmanvohra. One is economic substance transaction (consolidation,purchasing shares), not legal form transaction, another one is economic substance transaction and legal form transaction (business combination, purchasing assets and liabilities).