A gain on bargain purchase arising in a business combination does not have any deferred tax implications.

Question

Quizplus · Accepted Answer

According to IFRS 3 (Business Combinations), a gain on bargain purchase is recognized when the fair value of the net assets acquired exceeds the purchase consideration. Such a gain is recognized in profit or loss in the period of the business combination. However, the gain on bargain purchase does not have any deferred tax implications because it represents a purchase price adjustment rather than a tax-deductible or taxable temporary difference.

A Gain on Bargain Purchase Arising in a Business Combination