Statement I: In a business combination achieved in stages, the resulting gain or loss from the remeasurement of the acquirer’s previously held equity interest to its acquisition-date fair values shall be recognize in profit or loss or other comprehensive income. Statement II: The measurement period shall not exceed one year from the acquisition date. a. True, False b. False, False c. True, True d. False, True

Statement I: In a business combination achieved in stages, the resulting gain or loss from the remeasurement of the acquirer’s previously held equity interest to its acquisition-date fair values shall be recognize in profit or loss or other comprehensive income. Statement II: The measurement period shall not exceed one year from the acquisition date. a. True, False b. False, False c. True, True d. False, True

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 11MC: Also known as the historical cost principle, ________ states that everything the company owns or...

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A gain on a bargain purchase is A. Recognized in profit or loss in the year of acquisitionB. Amortized in profit or loss over the lower of its legal life and estimated useful lifeC. Recognized in profit or loss in the year of acquisition but only after reassessment of the assets acquired and liabilities assumed in the business combinationD. None of the above
Under PFRS 3, when is a gain recognized in consolidating financial information? a. In a combination created in the middle of the fiscal year b. In an acquisition when the value of all assets and liabilities cannot be determined. c. When any bargain purchased is created d. When the amount of a bargain purchase exceeds the value of the applicable liability held by the acquired company.
Under PFRS 3, when is a gain recognized in consolidating financial information? Group of answer choices a.When the amount of a bargain purchase exceeds the value of the applicable liability held by the acquired company. b.In an acquisition when the value of all assets and liabilities cannot be determined. c.When any bargain purchased is created d.In a combination created in the middle of the fiscal year
Statement I: The equity securities issued as part of the consideration transferred shall be measured at the fair value of the shares at the date of acquisition.Statement II: The goodwill in the books of the acquiree shall be measured at its fair value at the date of acquisition. a. True, False b. False, True c. True, True d. False, False
Statement I: During the measurement period, the acquirer shall prospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of acquisition date.Statement II: Controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. a. True, True b. False, False c. False, True d. True, False
If the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the acquirer shallI. Reassess the identification and measurement of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the combination.II. Recognize immediately in retained earnings any excess remaining after the reassessment. a. II only b. Both I and II c. I only d. Neither I nor II
5. How should accounting fees for acquisition be treated? A. Expensed in the period of acquisition B. Capitalized as part of acquisition cost C. Deferred and amortized D. Deferred until the company is disposed of or wound-up 6.The excess of the price paid over the fair value of the net identifiable assets acquired should be recognized as A. Goodwill to be amortized periodically for 20 yearS. B. Expenses immediately C. Goodwill not subject to amortization but subject to impairment D. Goodwill to be amortized for 40 years 7.Under PFRS 3 (Business Combinations) A. Both direct and indirect costs are to be capitalized B. Both direct and indirect costs are to be expensed C. Direct costs are to be capitalized and indirect costs are to be expensed D. Indirect costs are to be capitalized and direct costs are to be expensed
Which of the following is incorrect regarding measurement period? a. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. b. During the measurement period, the acquirer shall also recognise additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that date. c. The measurement period ends as soon as the acquirer receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. d. During the measurement period, the acquirer shall prospectively adjust the provisional amounts recognised at the acquisition date…
Choose the correct. When does gain recognition accompany a business combination?a. When a bargain purchase occurs.b. In a combination created in the middle of a fiscal year.c. In an acquisition when the value of all assets and liabilities cannot be determined.d. When the amount of a bargain purchase exceeds the value of the applicable noncurrent assets (other than certain exceptions) held by the acquired company.
In a business combination achieved in stages, if the acquisition date fair value of the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities of the acquiree is higher than the aggregate of the (1) acquisition date fair value of the consideration transferred by the acquirer; (2) amount of noncontrolling interest measured at fair value or proportionate share; and (3) acquisition date fair value of acquirer's previously held equity interest in the acquire, the difference shall be accounted for by the acquirer in its consolidated statement of financial position as:A. GoodwillB. Deduction directly to retained earningsC. Expense as incurredD. Gain on bargain purchase
a) The amount of the adjustment to the non-controlling interest in consolidated net assets is equal to the non-controlling interest’s percentage of the A. Realized intercompany gain at the end of the period. B. Unrealized intercompany gain at the beginning of the period C. Realized intercompany gain at the beginning of the period D. Unrealized intercompany gain at the end of the period b) In years subsequent to the upstream intercompany sale of non-depreciable assets, the necessary consolidated workpaper entry is debit to the A. Non-controlling interest and retained earnings (parent) accounts, and credit to the non-depreciable asset B. No entries are necessary C. Non-depreciable asset and credit to non-controlling interest and Investment in Subsidiary account. D. Retained Earnings (parent) account and credit to non-depreciable asset.
A gain arising from a change in the fair value of an investment property for which an entity has opted to use the fair value model is recognized in A. Net profit or loss for the year. B. General reserve in the shareholders' equity. C. Valuation reserve in the shareholders' equity. OD. None of the above.