t1 An entity shall determine whether a transaction or other event is a business combination byapplying the definition in PFRS 3, which requires that:All of the combining entities or businesses are ultimately controlled by the same party or parties both beforeand after the business combination.All of the combining entities transfer their net assets, or the owners of those entities transfer their equityinterests, to a newly formed entity.O The assets acquired and the liabilities assumed constitute a business.O All of the above.

A transaction or event is determined as business combination if Assets and liabilities aquired…

Answered: An entity shall determine whether a…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter6: Audit Evidence

Section: Chapter Questions

Problem 15CYBK

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In a business combination, the acquiree is the business that: Select one: a. Finances the business combination. b. Pays the acquisition consideration. c. The acquirer obtains control of in a business combination. d. Obtains control of the acquiree.
In a business combination, an acquirer's interest in the fair value of the net assets acquired exceeds the consideration transferred in the combination. Under IFRS 3 Business Combinations, the acquirer should a. reassess the recognition and measurement of the net assets acquired and the consideration transferred, then recognize any excess immediately in profit or loss b. recognize the excess immediately in other comprehensive income c. reassess the recognition and measurement of the net assets acquired and the consideration transferred, then recognize any excess immediately in other comprehensive income d. recognize the excess immediately in profit or loss
The economic entity assumption requires that the activities Select one: a. of a sole proprietorship cannot be distinguished from the personal economic events of its owners. b.of an entity be kept separate from the activities of its owner. c. of different entities can be combined if all the entities are corporations. d.must be reported to the Securities and Exchange Commission.
(TCO B) Goodwill is often acquired as part of a business combination. When a separate incorporation is maintained, why then does goodwill not appear on the parent company's trial balance as a separate account?
A. Both statements are correct. B. Only S1 is correct. C. Only S2 is correct. D. Both statements are incorrect.
Which of the following statements regarding the accounting for business combinations is false? Review Later The acquirer in a business combination will anly recognize the labilities assumed if they meet the definition of liabilities and are part of the business combination transaction. Under the acquisition method, the identifiable assets acquired during a business combination are measured at their acquisition- date fair values. Goodwill is the difference between the consideration transferred by the acquirer to the acquiree and the fair value of identifiable assets acquired. The identifiable assets acquired, liabilities assumed, and noncontrolling interest in the acquiree are recognized separately from the goodwill arising out of a business combination.
In a business combination, an acquirer's interest in the fair value of the net assets acquired exceeds the consideration transferred in the combination. Under PFRS 3 Business Combinations, the acquirer should A. recognize the excess immediately in profit or los B. recognize the excess immediately in other comprehensive income C. reassess the recognition and measurement of the net assets acquired and the consideration transferred, then recognize any excess immediately in other comprehensive income D. reassess the recognition and measurement of the net assets acquired and the consideration transferred, then recognize any excess immediately in profit or loss
What are 2 specific criteria essential to determine whether to recognize an intangible asset in a business combination? What are some reasons that a business combination take place? Goodwill is often acquired as part of a business combination. Why, when separate incorporation is maintained, then goodwill does not appear on parent’s company trial balance as a separate account?
Which of the following is not considered in the determination of Total Assets after business combination? Group of answer choices a.Book value of the acquirer’s total assets. b.Fair value of the acquiree’s total assets. c.Expenses that are actually paid in relation to business combination d.Contingent consideration
Revenue is recognized when it is earned; therefore revenue earned for a consolidated entity occurs when there is a sale to outside entity Select one: True False
Which of the following is NOT true with regard to the statutory consolidation form of business combination? a. The combining entities both cease to exist after the combination. b. A new corporation must be formed. c. Control of the net assets of the combining entities must be acquired by the new entity. d. The net assets of the combining entities must be acquired with assets of the new corporation.
2

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An entity shall determine whether a transaction or other event is a business combination by applying the definition in PFRS 3, which requires that: