Which of the following is not an application of the acquisition method?
Q: Which of the following statements about a business combination is valid?
A: Answer: b.The acquirer should recognize the acquiree’s contingent liabilities if certain conditions…
Q: Acquisition accounting requires an acquirer and an acquirer to be identified for every business…
A: Solution: An acquirer is a company/entity obtaining control over one or more businesses. Therefore…
Q: Choose the letter of the item NOT belonging or related to the group in computing for Non-Controlling…
A: Firstly let us understand consolidated statements. Consolidated financial statements are prepared…
Q: Since its enactment, PSAK 22: Business Combinations must be applied to all acquisitions. Explain how…
A: Solution of (a) A business combination is when a buyer takes control of another business by way of a…
Q: During an acquisition, when should intangible assets NOT be recognized apart from Goodwill? A. The…
A: The correct answer is Option (d)The assets have been accounted for by the subsidiary but have no…
Q: If the acquirer's interest in the net fair value of the identifiable asset liabilities exceeds the…
A: In extremely rare circumstances, an acquirer will make a bargain purchase in a business combination…
Q: How is goodwill or gain from bargain purchase computed? Group of answer choices a. The difference…
A: Solution How is goodwill or gain from bargain purchase computed Correct answer is option d) The…
Q: If the value implied by the purchase price of an acquired company exceeds the fair values of…
A: Goodwill on acquisition = Purchase consideration paid - Fair value of net identifiable assets…
Q: Which of the following is an example of asset recognised by the acquirer as part of a business…
A: Assets are the things which provide ownership and control. These are tangible and intangible in…
Q: How shall an acquirer in a business combination account for the changes in fair value contingent…
A: Business combination is a form of arrangement or agreement between two or more than two entities in…
Q: Which of the following statements about a business combination is valid? The acquirer should…
A: The acquirer should recognise the net assets acquired and the fair value of consideration…
Q: Which statement is correct regarding derecognition of financial assets? A. Transfer of risks and…
A: The process of derecognizing financial assets in which the entity fully transfers the asset and all…
Q: Which of the following statements is true when assessing whether potential voting rights contribute…
A: 1) When assessing whether or not possible voting rights assist control? All facts and situations…
Q: When there is a dividend payable by the subsidiary at acquisition date, under what conditions should…
A: Pre-acquisition entries: Pre-acquisition entries are required to keep 'investment in subsidiaries'…
Q: When does gain recognition accompany a business combination?a. When a bargain purchase occurs.b. In…
A: Gains: Gain can be defined as the revenue exceeding the expenses, this increases the equity.
Q: Statement I: During the measurement period, the acquirer shall prospectively adjust the provisional…
A: Measurement period :- Measurement period is the period after the acquisition date during which the…
Q: Which of the following accounting treatments for costs related to business combination is incorrect?
A: Answer - The Pre incorporation Costs shall not be capitalised. If shall be debited to Profit and…
Q: A business combination resulting to a goodwill is accounted using acquisition method. In the…
A: Acquisition accounting refers to the process of accounting through which the assets, liabilities,…
Q: Which of the following would NOT be included in the acquisition cost?
A: The acquistion cost is the total cost incurred in the acuistion of…
Q: Which of the following is not an application of the acquisition method? a. Measuring the…
A: Option a is correct.
Q: At acquisition date, the net assets of the acquired subsidiary are included in the consolidated…
A: The IAS 10 deals with the consolidation of financial statements. The process of consolidating the…
Q: During the current year, an entity acquires another entity in a transaction properly accounted for…
A: If at the time of the acquisition, some of the information for valuing assets was incomplete and the…
Q: Which of the following statements regarding the accounting for business combinations is false?…
A: Although goodwill is the difference between the consideration transferred by the acquirer to the…
Q: How is a goodwill in a business combination measured according to PFRS 3? Consideration transferred…
A: As per PFRS 3 Goodwill is an intangible asset representing the future value of economic benefits…
Q: In a business combination, an acquirer's interest in the fair value of the net assets acquired…
A: It should be recognised as capital reserve in the statement of comprehensive income... The…
Q: Under the Acquisition Method, regardless of the purchase price, identifiable net assets of the…
A: In case one company overtake the assets and liabilities of another company , then accounting for…
Q: If the acquirer’s interest in the net fair value of the identifiable assets, liabilities and…
A: The goodwill should be reassessed at the time of acquisition to check its accuracy. If any negative…
Q: At acquisition date, the net assets of the acquired subsidiary are included in the consolidated…
A: Whenever the assets are purchased by the business entity, it is recorded in the books of accounts at…
Q: When negotiating a business acquisition, buyers sometimes agree to pay extra amounts to sellers in…
A: Definition: Contingent liability: This is an uncertain obligation that might be incurred on a…
Q: Which of the following statements is TRUE? O The acquirer shall measure the identifiable assets…
A: As per IFRS 3 Acquisition Method shall be used for accounting businees combination. As per the IFRS…
Q: If the entity uses the fair value model for investment property, which statement is true? a. The…
A: Fair value of investment property means value at which property can be exchanged in open market.…
Q: If the value implied by the purchase price of an acquired company exceeds the fair values of…
A: Business combination between companies may result in profit or loss which are generally referred…
Q: How shall an acquirer in a business combination account for the changes in fair value contingent…
A: The answer for the multiple choice question and relevant explanation are presented hereunder : What…
Q: What is the requirement with respect to the allocation of the cost of a business acquisition? a.…
A: Acquisition method is used in all types of business acquisition.
Q: Companies are required to value non-controlling interests on the acquisition date. Wat approaches…
A: Non Controlling Interest at acquisition date is measured using two methods, they are Fair Value…
Q: goodwill or gain from bargain purchase computed
A: First option is wrong because non-controlling interest is not considered in determining the goodwill…
Q: if the value implied by the purchase price of an acquired company exceeds the fair values of the…
A: Acquisition refers to purchase of a company by another company by paying purchase consideration in…
Q: Which of the following is incorrect regarding measurement period? a. If the initial accounting for…
A: Measurement period refers to the one year period that the variable hour employee's weekly measured…
Q: When an item of property, plant and equipment is acquired by issuing equity shares, which of the…
A: Option C is the correct Answer
Q: At acquisition date, the net assets of the acquired subsidiary are included in the consolidated…
A: The IAS 10 deals with the consolidation of financial statements. The process of consolidating the…
Q: A business combination resulting to a goodwill is accounted using acquisition method. In the…
A: In the given case A business combination resulting to a goodwill is accounted using acquisition…
Q: The prior period will be affected if during the current year the management of an entity decides to…
A: Prior period is the period before the current accounting year. Non current asset is the long term…
Q: At acquisition date the net assests of the acquired subsidairy are included in the consolidated…
A: Consistency: Consistency principle emphasizes that companies should adhere to same accounting…
Q: During the measurement period, which of the following may affect the amount of goodwill from…
A: Measurement period is the period after the acquisition date in which acquirer can adjust the…
Q: Which of the following is/are true regarding goodwill achieved through acquisition as part of…
A: Goodwill is referred to as intangible non-current asset of the business. In the case, the goodwill…
Q: Acquisition accounting requires an acquirer and an acquirer to be identified for every business…
A: Solution: An acquirer is a entity/business who obtains control over another entity/Business.…
Q: In an acquisition where control is achieved and the fair value of the consideration transferred is…
A: Acquisition:-When assets of one company acquired by another company with some holding rights.
Q: Choose the correct. When does gain recognition accompany a business combination?a. When a bargain…
A: Gains: Gain can be defined as the revenue exceeding the expenses, this increases the equity.
Which of the following is not an application of the acquisition method?
a) Measuring the consideration transferred at fair value.
b) Determining the acquisition date which is the date the acquirer obtains control over acquiree.
c) Identifying the acquirer which is the entity that obtains control over another business in a business combination.
d) Measuring the non-controlling interest at the NCI’s proportionate share in the acquiree’s net identifiable assets or fair value, whichever is higher.
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- Which of the following is not an application of the acquisition method? a. Measuring the non-controlling interest at the non-controlling interest’s proportionate share in the acquiree’s net identifiable assets or fair value, whichever is higher. b. Measuring the consideration transferred at fair value. c. Identifying the acquirer which is the entity that obtains control over another business in a business combination. d. Determining the acquisition date which is the date the acquirer obtains control over acquiree.How is goodwill or gain from bargain purchase computed? The difference between the consideration transferred, including non-controlling interest in the acquiree, and the acquisition-date fair value of net identifiable assets acquired. The excess of the acquisition-date fair value of net identifiable assets acquired and there carrying amounts in the acquiree's books. The difference between the sum of (a) consideration transferred; (b) non-controlling interest in the acquiree; and (c) acquisition-date fair value of the acquirer’s previously held equityinterest in the acquiree; and the acquisition-date fair value of net identifiable assets acquired. The difference between the purchase price and the acquisition-date fair value of net identifiable assets acquired.Which of the following is/are true regarding goodwill achieved through acquisition as part of business combination? Where the acquirer was able to purchase the business at a discount, the excess of the market capitalization over the consideration transferred will be recognized in profit or loss. The acquirer shall recognize goodwill as of the acquisition date measured as the excess of the aggregate of the consideration transferred over the net of the fair values of all the assets acquired and the liabilities assumed Group of answer choices Both statements are true. None of these statements are true. 2 only. 1 only.
- Under PFRS 3, when is a gain recognized in consolidating financial information? Group of answer choices a.When the amount of a bargain purchase exceeds the value of the applicable liability held by the acquired company. b.In an acquisition when the value of all assets and liabilities cannot be determined. c.When any bargain purchased is created d.In a combination created in the middle of the fiscal yearAn entity acquired control of another entity by purchasing shares in steps. Which of the following statements regarding this type of acquisition is true? A. The previously held shares should be remeasured at fair value on the acquisition date and the gain recognized in earnings of the period B. The previously held shares should be remeasured at fair value on the acquisition date and any gain on previously held shares should be included in other comprehensive income for the period C. The acquisition cost includes only the newly issued shares measured at fair value on the date if acquisition D. The cost of acquisition equals the amount paid for the previously held shares plus the fair value of shares issued at date of acquisition.When does gain recognition accompany a business combination?a. When a bargain purchase occurs.b. In a combination created in the middle of a fiscal year.c. In an acquisition when the value of all assets and liabilities cannot be determined.d. When the amount of a bargain purchase exceeds the value of the applicable noncurrent assets (other than certain exceptions) held by the acquired company.
- Indicate which of the following features would be considered an advantage of acquiring assets rather than shares in the purchase of an incorporated business. A. The ability to carry forward non-capital losses after the acquisition. B. the ability to avoid land transfer tax. C. The availability of the lifetime capital gains deduction D. the ability to recognize the acquired company goodwillChoose the correct. When does gain recognition accompany a business combination?a. When a bargain purchase occurs.b. In a combination created in the middle of a fiscal year.c. In an acquisition when the value of all assets and liabilities cannot be determined.d. When the amount of a bargain purchase exceeds the value of the applicable noncurrent assets (other than certain exceptions) held by the acquired company.How shall an acquirer in a business combination account for the changes in fair value contingent consideration classified as equity instrument if the changes result from events after the acquisition date? a. The changes in fair value of contingent consideration classified as equity shall be recognized as gain or loss in profit or loss because they are not measurement period adjustments. b. Contingent consideration classified as equity shall not be re-measured and its subsequent settlement shall be accounted for within equity. c. The changes in fair value of contingent consideration classified as equity shell be retrospectively restated to beginning retained earnings because they are prior period error. d. The change in fair value of contingent consideration classified as equity shall be retroactively adjusted to goodwill/gain on bargain purchase because they are measurement period adjustments.
- How is goodwill or gain from bargain purchase computed? Group of answer choices a. The difference between the sum of (a) consideration transferred; (b) non-controlling interest in the acquiree; and (c) acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree; and the acquisition-date fair value of net identifiable assets acquired. b. The excess of the acquisition-date fair value of net identifiable assets acquired and there carrying amounts in the acquiree's books. c. The difference between the consideration transferred, including non-controlling interest in the acquiree, and the acquisition-date fair value of net identifiable assets acquired. d. The difference between the purchase price and the acquisition-date fair value of net identifiable assets acquired.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 lossHow is a goodwill in a business combination measured according to PFRS 3? a. Consideration transferred plus amount of non-controlling interest plus carrying value of previously held interest in the acquiree minus identifiable net assets acquired. b. Consideration transferred plus amount of non-controlling interest minus identifiable net assets acquired. c. Consideration transferred plus amount of non-controlling interest plus carrying value of previously held interest in the acquiree plus identifiable net assets acquired. d. Consideration transferred plus amount of non-controlling interest plus fair value of previously held interest in the acquiree minus identifiable net assets acquired.
