A contingent liability assumed in a business combination: a. Is not accounted for by the acquirer if the contingent liability has an improbable outflow of economic resources. b. Is recognized even if it has an improbable outflow of economic resources for as long as there is present obligation and the fair value of the obligation can be measured reliably c. Is recognized only if there is present obligation, probable outflow of economic resources, and can be measured reliably. d. Are not accounted for by the acquirer if the contingent liability has an improbable outflow of economic resources and recognized only if there is present obligation, probable outflow of economic resources, and can be measured reliably.

Q: receivables not measured initially at their transaction price are measured initially at a. fair…

A: Financial Asset or Receivables: The financial Asset or Receivables is measured initially at fair…

Q: Which of the following statements about a business combination is valid?

A: Answer: b.The acquirer should recognize the acquiree’s contingent liabilities if certain conditions…

Q: In a transaction accounted for using the acquisition method where consideration transferred is less…

A: The acquisition method is used when a business is taken over by another business.

Q: The fair value of a liability is defined as: a. the appraised value of the liability. b. the price…

A: The fair value of a liability is defined as the amount that would be paid when transferring a…

Q: If a company uses the fair value model to value investment property, changes in the fairvalue of the…

A: Under the fair value model, remeasuring of investment property is made at the end of each reporting…

Q: Which of the following is not considered a characteristic of a liability? O Present obligation. O…

A: Liability means the amount which is to be paid to an outsider by business.  It is the present…

Q: Choose the correct. When negotiating a business acquisition, buyers sometimes agree to pay extra…

A: The correct answer is Option (c).

Q: Which of the following is a characteristic of a current liability but not a long-term liability?…

A: A liability is an obligation that comes from transactions done in past and payable in assets or in…

Q: What principle(s) from the conceptual framework does Henday Limited use in each of the following…

A: Conceptual framework is a concept with several variations and contexts.It basically helps you to…

Q: Choose the correct. FASB ASC 805, “Business Combinations,” provides principles for allocating the…

A: Financial Accounting Standards Board (FASB):  FASB is an independent 7 member board, of accounting…

Q: Which of the following statements about a business combination is valid? The acquirer should…

A: The acquirer should recognise the net assets acquired and the fair value of consideration…

Q: Which statement is correct regarding derecognition of financial assets?   A. Transfer of risks and…

A: The process of derecognizing financial assets in which the entity fully transfers the asset and all…

Q: When the price paid to acquire another firm is lower than the fair value of its identifiable net…

A: When the price paid to acquire a business is lower than the fair value of its identifiable net…

Q: 6. A liability is recognized in the statement of comprehensive income when it is probable that an…

A: As per IASC framework, the liability is recognized in the financial statement when two conditions…

Q: Under - PFRS 15, when shall entity recognize revenue from contract with customers? Select the…

A: The revenue   should  be satisfied  only when the services or goods that have been  transferred at a…

Q: The amount for which an asset could be exchanged, a liability settled , or an equity instrument…

A: The amount for which an asset could be exchanged, a liability settled , or an equity instrument…

Q: ted. Does the expected loss meet the definitio

A: Conceptual Framework A conceptual framework is a written or visual representation of how variables…

Q: In a business combination in which the total fair value of the identifiable assets acquired over…

A: As per IFRS 3  Business combination  The core Principles of business combination states that When…

Q: The historical cost principle provides that: Select one: O a. the recorded amount of an acquired…

A: Accounting principles are the rules required to be followed by the company in the process of…

Q: A company should record an asset called "Goodwill" when it purchases another company for an amount…

A: Goodwill is one of the intangible assets.

Q: Examples of when an entity has retained substantially all the risks and rewards of ownership of…

A: Following is the example of entity has retained substantially all the risk and rewards of ownership.

Q: a) In your own words, explain how do we account for service costs included within a contract to…

A: Disclaimer: “Since you have asked multiple question, we will solve the first question for you. If…

Q: The gain/loss related to a sale and leaseback transaction not recognized by the seller-lessee in its…

A: Rights retained .. The gain or the loss relating to a sale and leaseback transaction not recognized…

Q: Reporting an investment at its fair value requires adjusting its carrying amount for changes in fair…

A: Available-for-sale (AFS) securities: These are short-term or long-term investments in debt and…

Q: Which of the following is not an essential characteristic of a liabili O All are essential…

A: Liabilities are those present obligations that are due to business and they could be short-term in…

Q: Short-term obligations can be reported as noncurrent liabilities if the company (a) intends to…

A: There are two conditions in which short term obligations can be reported as non current liabilities…

Q: When an investment ceases to be an associate, the fair value of the investment at the date when it…

A: Investment is the amount saved by the investor in order to earn regular income as well as get the…

Q: Restructuring provisions Are generally not recognized as part of business combination unless the…

A: Restructuring provisions means provisions for estimated cost of reorganisation of a company at the…

Q: If the acquirer’s interest in the net fair value of the identifiable assets, liabilities and…

A: The goodwill should be reassessed at the time of acquisition to check its accuracy. If any negative…

Q: loses significant influence over the associate, the balance of the investment in the associate is…

A: When the company has significant influence over the associate, then equity method should be used for…

Q: Which of the following is correct about subsequent measurement of financial asset at fair value? a.…

A: Fair value through other comprehensive income-financial assets are classified and measured at fair…

Q: When negotiating a business acquisition, buyers sometimes agree to pay extra amounts to sellers in…

A: Definition:   Contingent liability: This is an uncertain obligation that might be incurred on a…

Q: which statements is incorrect regarding for value measurements? a. fair value is normally the…

A: Fair value is the price that would be received to sell the asset or paid to transfer the liability…

Q: Which of the following statements is TRUE? O The acquirer shall measure the identifiable assets…

A: As per IFRS 3 Acquisition Method shall be used for accounting businees combination. As per the IFRS…

Q: Goodwill recognized in a business combination must be allocated among a firm’s identified reporting…

A: Goodwill: Goodwill is the good reputation developed by a company over years. This is recorded as an…

Q: In a business combination, goodwill is defined as the excess of acquisition cost over the   a.…

A: Goodwill is a form of intangible asset for the business which we cannot see or touch but one can…

Q: When the required balance of the loss allowance decreases, a. the entity recognizes gain. b. the…

A: As per IFRS 9, a loss Allowance is made for the expected losses on any asset.  It reduces the…

Q: When a company sells an asset and simultaneously leases it back, what criteria must be met to apply…

A: Sale-Leaseback approach:   In the sale-leaseback approach, the owner of the leased asset sells it…

Q: A. For an asset, derecognition normally occurs when the entity loses control of all or part of the…

A: Derecognition means derecognizing the assets or liability where some predefined conditions met.

Q: Which of the following is not an essential characteristic of a liability? * O līability is a present…

A: Ans. Liability is an obligation to pay to a person or an entity by any person or entity.

Q: The price that would be received to sell an asset or paid to transfer a liability in an orderly sale…

A: In accountancy, an asset can be defined as a business item used for the purpose of running business.…

Q: Goodwill recognized in a business combination must be allocated among a firm’s identified reporting…

A: The fair value of a particular reporting unit with recognized goodwill falls below its carrying…

Q: Any of the following criteria is considered satisfaction by an entity of performance obligation over…

A: As per IFRS 15, An entity transfers control of a good or service over time and, therefore, satisfies…

Q: The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange…

A: Fair Value:Fair value is the price settled and agreed by both buyer and seller, each of them acting…

Q: One of examples of contingent liability is an: * a. Obligations related to product warranties b.…

A: As per IFRS 37 provisions, contingent liabilities and Contingent assets. A provision is an present…

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.