Question 1

IFRS 3 requires disclosures that enable users of financial statements to evaluate the nature and financial effect of business combinations.

Accepted Answer

A) True 
 B)False  True

Question 2

The fair value of the controlling interest is always proportional to that of the non- controlling interest

Accepted Answer

A) True 
 B)False  False

Question 3

Which of these would NOT be a contingent consideration?

Accepted Answer

A) Changes of contracts within the acquiror,so that another investor takes control 
B) The acquirees operational results falling short of an agreed level 
C) The acquirees operational results exceeding an agreed level 
D) Changes in the market price of securities issues as part of the purchase consideration being made 
A) Changes of contracts within the acquiror,so that another investor takes control 
B) The acquirees operational results falling short of an agreed level 
C) The acquirees operational results exceeding an agreed level 
D) Changes in the market price of securities issues as part of the purchase consideration being made A

Question 4

The first step in account for a business combination is to identify the acquirer.Which of these is not a property of the acquirer?

Accepted Answer

A) In a combination primarily effected by the transfer of cash and liabilities the acquirer is usually the transferor rather than the recipient 
B) The owners of the acquirer usually retain or receive the largest portion of relevant voting rights 
C) The acquirer is usually unable to dominate the selection of the management team of the combined entity 
D) The owners of the acquirer are usually able to appoint/remove or elect a majority of the governing body of the combined entity 
A) In a combination primarily effected by the transfer of cash and liabilities the acquirer is usually the transferor rather than the recipient 
B) The owners of the acquirer usually retain or receive the largest portion of relevant voting rights 
C) The acquirer is usually unable to dominate the selection of the management team of the combined entity 
D) The owners of the acquirer are usually able to appoint/remove or elect a majority of the governing body of the combined entity

Question 5

How does IFRS 3 require equity interests in business combination achieved in stages to be measured?

Accepted Answer

A) Equity interests should be added at their current fair value 
B) Equity interests should be added at their acquisition date fair value 
C) Equity interests should be remeasured at acquisition date fair value,with recognition of the resulting changes in profit or loss 
D) Equity interests should be remeasured at current fair value,with r recognition of the resulting changes in profit or loss 
A) Equity interests should be added at their current fair value 
B) Equity interests should be added at their acquisition date fair value 
C) Equity interests should be remeasured at acquisition date fair value,with recognition of the resulting changes in profit or loss 
D) Equity interests should be remeasured at current fair value,with r recognition of the resulting changes in profit or loss

Question 6

IFRS 3 defines a business combination as a transaction or other event in which an acquirer obtains control of one or more businesses

Accepted Answer

A) True 
 B)False

Question 7

The identifiable assets acquired and liabilities assumed need to be recognized and measured.Why are the acquirees' book values not suitable?

Accepted Answer

A) Assets and liabilities may have changed value 
B) Additional intangible assets and liabilities are not on the balance sheet 
C) The accounts may have a different date 
D) They may be in a different currency 
A) Assets and liabilities may have changed value 
B) Additional intangible assets and liabilities are not on the balance sheet 
C) The accounts may have a different date 
D) They may be in a different currency

Question 8

There is agreement between all accounting standards about how to account for goodwill

Accepted Answer

A) True 
 B)False

Question 9

IFRS 3 requires goodwill to be amortized

Accepted Answer

A) True 
 B)False

Question 10

Which of these properties of business combinations does not require disclosure under IFRS 3?

Accepted Answer

A) Change of managerial staffing 
B) Names and descriptions of combining entities 
C) Percentage of voting equity instruments acquired 
D) Acquisition date 
A) Change of managerial staffing 
B) Names and descriptions of combining entities 
C) Percentage of voting equity instruments acquired 
D) Acquisition date

Exam 26: Business Combinations

IFRS 3 requires disclosures that enable users of financial statements to evaluate the nature and financial effect of business combinations.

The fair value of the controlling interest is always proportional to that of the non- controlling interest

Which of these would NOT be a contingent consideration?

The first step in account for a business combination is to identify the acquirer.Which of these is not a property of the acquirer?

How does IFRS 3 require equity interests in business combination achieved in stages to be measured?

IFRS 3 defines a business combination as a transaction or other event in which an acquirer obtains control of one or more businesses

The identifiable assets acquired and liabilities assumed need to be recognized and measured.Why are the acquirees' book values not suitable?

There is agreement between all accounting standards about how to account for goodwill

IFRS 3 requires goodwill to be amortized

Which of these properties of business combinations does not require disclosure under IFRS 3?

Basics of Financial Reporting

International Accounting Differences

The Process of Harmonization

Economic Valuation Concepts

Current Entry Value

Current Exit Value and Mixed Values

Current Purchasing Power Accounting

Fair Values

Accounting Theory and Conceptual Frameworks

Structure of Published Financial Statements

Corporate Governance, corporate Social Responsibility and Ethics

Basics of Interpretation of Financial Statements

Fixed Non-Currenttangible Assets

Intangible Assets

Impairment and Disposal of Assets

Leases

Inventories and Construction Contracts

Accounting for Financial Instruments

Revenue

Provisions, contingent Liabilities and Contingent Assets

Income Taxes

Employee Benefits

Changing Prices and Hyperinflationary Economies

Statements of Cash Flows

Disclosure Issues

Consolidated Financial Statements

Alternative Concepts on Consolidation and Business Combinations

Accounting for Associates, joint Arrangements and Related Party Disclosures

Foreign Currency Translation

Interpretation of Financial Statements

Techniques of Financial Analysis

Filters