Exam 14: Business Combinations

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

Damon Limited acquired the net assets of Gina Limited. Damon Limited provided an item of equipment as part of the consideration. The fair value of the equipment was $13 000. It cost $20 000 and had a carrying amount of $12 000. Which of the following entries appropriately reflects the gain or loss on the equipment?

When an acquirer accounts for a business combination they have to consider: I. recognition of the identifiable assets acquired II. measurement of the identifiable assets acquired III. recognition of the liabilities assumed IV. measurement of the liabilities assumed

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

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?

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

Under IFRS 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 acquiree is the party that:

Appendix B of IFRS 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

Where an entity acquires shares rather than the net assets of another entity the acquirer records the shares at:

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:

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:

Subsequent to acquisition date contingent liabilities are measured at:

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

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

The acquisition date for a business combination is the date on which:

Neil Limited sold a business to Howell Limited for $60 000. All assets were recorded by the acquiree at their fair values as follows: Land $30 000 Inventory $20 000; Accounts receivable $4000. When recording the sale, the acquiree recognises:

When an acquiree disposes of a business, the gain or loss is recognised in:

Valdez Limited acquired a 25% interest in Alaska Pty Ltd on 1 January 2013. On 15 September 2013 it acquired an additional 10% interest, and on 15 March 2014 a further 40%. Under IFRS 3 a business combination occurs on:

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: