Deck 26: Business Combinations

Question 1

IFRS 3 requires goodwill to be amortized

Answer 1

False

Question 2

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

Answer 2

False

Question 3

Which of these would NOT be a contingent consideration?

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

Answer 3

A

Question 4

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

Question 5

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

Question 6

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

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 7

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

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

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

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

Question 9

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

Question 10

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

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