Exam 24: Business Combinations

Goodwill is measured as the difference between the:

Goodwill arising in a business combination is classified as:

Bolton Limited acquires the net assets of Pamelia Limited for a cash consideration of $100 000. One half is to be paid on acquisition date and one half is payable in one year's time. The appropriate discount rate is 10% p.a. The present value of the cash outflow in one year's time is:

In a business combination, the acquiree is the party that:

Under AASB 3 the method of accounting for a business combination is the:

Net employee benefit liabilities acquired in a business combination are measured by using the:

Johnson Limited estimated the net present value of future cash flows from specialised Plant acquired under a business combination to be $30 000. A replacement cost for the Plant is estimated to be $33 000. The Plant has been independently appraised at a value of $31 000. A similar item of Plant cost the acquirer $29 000 last year. What is the fair value for recognition of the Plant under a business combination?

When accounting for a business combination a contingent liability is recognised if:

The following items are NOT deemed to be items that would meet the definition of an intangible asset under AASB 3:

Appendix B of AASB 3 requires disclosure of which of the following? I details of contingent consideration II the date of exchange III carrying amounts of assets and liabilities in business combinations where shares are acquired IV a qualitative description of the factors that make up goodwill

In order for a tangible asset to be recognised by an acquirer under a business combination it must be probable that future economic benefits will flow to the acquirer and:

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

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

The information contained within Appendix B of AASB 3 in relation to disclosure:

Fredericks Limited acquired the identifiable assets and liabilities of Nicole Limited for $134 000. The items acquired, stated at fair value, are: Plant $72 000 Inventory $40 000 Accounts receivable $18 000 Patents $10 000 Accounts payable $16 000. The difference on acquisition is:

Oliveira Limited estimated that the net present value of future cash flows from Equipment acquired in a business combination is $15 000. The cost of replacing the Equipment is estimated to be $18 000. The Equipment has been independently appraised at a value of $14 000. A similar item of Equipment cost the acquirer $19 000 last year. The fair value at which the Equipment will be recognised when recording the business combination is:

A business combination is defined as:

If shares are issued as part of the consideration paid, transactions costs such as brokerage fees may be incurred. According to AASB 3 Business Combinations the appropriate accounting treatment for such costs in the records of the acquirer is a debit to:

The consideration transferred in a business combination is measured as the fair value of the:

AASB 3 is relevant when accounting for a business combination that: