PFRS 3 must be applied when accounting for business combinations, but does not apply to: i. Formation of a joint arrangement ii. The acquisition of an asset or group of assets that is not a business although general guidance is provided on how such transactions should be accounted for iii. Combination of entities or businesses under common control iv. Acquisitions by an investment entity of a subsidiary that is required to be measured at fair value through profit or loss under PFRS 10 Consolidated Financial Statements v. Mutual entities vi. Not-for-profit organization

PFRS 3 must be applied when accounting for business combinations, but does not apply to: i. Formation of a joint arrangement ii. The acquisition of an asset or group of assets that is not a business although general guidance is provided on how such transactions should be accounted for iii. Combination of entities or businesses under common control iv. Acquisitions by an investment entity of a subsidiary that is required to be measured at fair value through profit or loss under PFRS 10 Consolidated Financial Statements v. Mutual entities vi. Not-for-profit organization

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter6: Audit Evidence

Section: Chapter Questions

Problem 15CYBK

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PFRS 3 must be applied when accounting for business combinations, but does not apply to:i. Formation of a joint arrangementii. The acquisition of an asset or group of assets that is not a business although general guidance is provided on how such transactions should be accounted foriii. Combination of entities or businesses under common controliv. Acquisitions by an investment entity of a subsidiary that is required to be measured at fair value through profit or loss under PFRS 10 Consolidated Financial Statementsv. Mutual entitiesvi. Not-for-profit organizations a. i, ii, iii, iv, and v b. i, ii, iii, and iv c. i, ii, iii, iv, v, and iv d. i, ii, iii, iv, and vi
1. PAS 28 defines an ‘associate’ as Choices An entity that controls one or more entities. An entity over which the investor has significant influence. A joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. An entity that is controlled by another entity. 2. In accordance with PAS 1, which of the following gains or losses from reclassification of financial assets need not be presented separately in the profit or loss section or the statement of profit or loss? Choices None of these. Reclassification of financial assets out of the FVTOCI measurement category to FVTPL. Reclassification of financial assets out of the amortized cost measurement category to FVTPL. Reclassification of financial assets out of the FVTPL measurement category.
Statement 1: In the financial settlement of a contingent consideration classified as financial liability, the amount shall be remeasured at fair value with any gain or loss included in profit or loss. Statement 2: If a new entity is formed to issue equity interests to effect a business combination one of the combining entitites that existed before the combination shall be identified as the acquirer. Which statement/s is TRUE?
In a business combination, an acquirer's interest in the fair value of the net assetsacquired exceeds the consideration transferred in the combination. Under PFRS3 Business Combinations, the acquirer should A. reassess the recognition and measurement of the net assets acquired and theconsideration transferred, then recognize any excess immediately in othercomprehensive income B. recognize the excess immediately in other comprehensive income C. recognize the excess immediately in profit or loss D. reassess the recognition and measurement of the net assets acquired and theconsideration transferred, then recognize any excess immediately in profit or loss
Which of the following statements regarding IFRS consolidated financial statements is/are correct: (i) An entity that has equity investments in one or more other entities is required to present consolidated financial statements (ii) A parent whose debt or equity instruments are not traded in a public market is not required to present consolidated financial statements (iii) Consolidated financial statements present the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries as those of a single economic entity
In a business combination, an acquirer's interest in the fair value of the net assets acquired exceeds the consideration transferred in the combination. Under PFRS 3 Business Combinations, the acquirer should A. recognize the excess immediately in profit or los B. recognize the excess immediately in other comprehensive income C. reassess the recognition and measurement of the net assets acquired and the consideration transferred, then recognize any excess immediately in other comprehensive income D. reassess the recognition and measurement of the net assets acquired and the consideration transferred, then recognize any excess immediately in profit or loss
In paragraph 44 of Statement of Financial Accounting Standards No. 141, “Business Combinations,” the Financial Accounting Standards Board directed that if the sum of the fair values of assets acquired and liabilities assumed in a business combination exceeds the cost of the acquired enterprise, such excess should be allocated as a pro rata reduction of amounts that otherwise would have been assigned to noncurrent assets other than specified exceptions.Instructions What support, if any, do you find for the action of the FASB? Explain.
In a business combination, an acquirer's interest in the fair value of the net assets acquired exceeds the consideration transferred in the combination. Under IFRS 3 Business Combinations, the acquirer should a. reassess the recognition and measurement of the net assets acquired and the consideration transferred, then recognize any excess immediately in profit or loss b. recognize the excess immediately in other comprehensive income c. reassess the recognition and measurement of the net assets acquired and the consideration transferred, then recognize any excess immediately in other comprehensive income d. recognize the excess immediately in profit or loss
The preparation of consolidated financial statements: Select one alternative: does not obviate the need for separate entities to prepare and release their own separate financial statements and should be done in accordance with IFRS 10 will eliminate the result derived from operations with parties external to the group of entities highlights income derived as a result of transactions within the group obviates the need for separate entities to prepare and release their own separate financial statements
Consolidation financial statements are prepared when a parent-subsidiary relationship exists in recognition of the accounting principle concept of: a. Reliability b. Entity c. Materiality d. Going Concern
Which of the following statements about joint arrangements is/are incorrect: (i) Whenever a joint arrangement is structured through a vehicle that is separate from the parties, the arrangement is classified as a joint venture (ii) Whenever the contractual arrangements give the parties rights to the assets and obligations for the liabilities of the arrangement, the arrangement is classified as a joint operation (iii) Joint operations are reported in the consolidated statement of financial position of the joint operator by recognising the share of assets and liabilities attributable to the joint operator (iv) Joint ventures are reported in the consolidated statement of financial position of the joint venturer using the equity method of accounting a. (i) only b. (ii) only c. (iii) only d. (iv) only e. (i) and (ii)
Which consolidation method should be used in preparing consolidated financial statements in accordance with IFRS? A. Proportionate consolidation method.B. Either identifiable net assets or fair value enterprise method.C. New entity method.D. Parent company method.