Exam 3: Business Combinations

Suncorp Limited acquired a 15% interest in Milton Pty Ltd on 1 January 2014. On 15 September 2014 it acquired an additional 25% interest, and on 15 March 2015 a further 15%. Under AASB 3/IFRS 3, a business combination occurs on:

AASB 3/IFRS 3 Business Combinations requires disclosure of 'a qualitative description of the factors that make up goodwill recognised, such as expected synergies from combining operations of the acquiree and the acquirer, intangible assets that do not qualify for separate recognition or other factors'.

Which of the following statements is incorrect?

Where an acquiree liquidates, the balance of the Shareholders' Distribution account is transferred to the Liquidation account.

Apha Limited acquired the net assets of Beta Limited. Alpha Limited provided an item of equipment as part of the consideration. The fair value of the equipment was $26 000. It cost $40 000 and had a carrying amount of $24 000. Which of the following entries appropriately reflects the gain or loss on the equipment?

According to Johnson and Petrone (1998), which of the following is not a component of goodwill?

According to AASB 3/IFRS 3 Business Combinations, the appropriate accounting treatment for the costs of issuing shares by the acquirer as part of a business combination is to record them as a debit to:

How many input levels does AASB 13/IFRS 13 Fair Value Measurement identify for the inputs to the valuation techniques?

Where equity instruments are issued as part of the consideration in a business combination, any costs associated with issuing such equity instruments are included as part of the cost of the business combination.

The use of estimates when measuring the fair values of assets results that the measures are unreliable.

Under AASB 3/IFRS 3 Business Combinations, a gain on bargain purchase arises when the acquirer's interest in the net fair value of the acquiree's identifiable assets and liabilities is:

The cost approach to determining fair value involves:

Under AASB 3/IFRS 3 Business Combinations, the required method of accounting for a business combination is the:

Which of the following statements in relation to contingent consideration is incorrect?

In a business combination, the acquirer is the entity that:

Cockroaches Limited acquired the identifiable assets, liabilities and contingent liabilities of Inglis Limited for $268 000. The items acquired, stated at fair value, are: plant $144 000; inventory $80 000; accounts receivable $36 000; patents $20 000; and accounts payable $32 000. The difference on acquisition is:

AASB 3/IFRS 3 Business Combinations requires an acquiree to go into liquidation in the event of a business combination.

The owners of Emily Limited sold the business to Georgia Limited. At acquisition date, the business had an item of plant which cost $70 000 and had accumulated depreciation of $24 000. The liquidation journal entry is which of the following?

Where the acquirer purchases the assets and assumes the liabilities of another entity, it does not need to consider the measurement of:

A business combination is defined in AASB 3/IFRS 3 as a transaction: