Exam 25: Business Combinations

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.

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

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:

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:

Which of the following items would NOT be recognised as an intangible asset in a business combination?

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

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

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

Goodwill arising in a business combination is classified as:

Appendix B of AASB 3/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.

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; inventories $40 000; accounts receivable $18 000; patents $10 000; accounts payable $16 000. The difference on acquisition is:

Under AASB 3/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:

Goodwill is measured as the difference between the:

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

A business combination is defined as:

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 value at which the equipment will be recognised when recording the business combination is:

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

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

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

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 value for recognition of the plant under a business combination?