Question 1

According to AASB 3,how is goodwill acquired in a business combination recognised?

Accepted Answer

A)  As an asset, initially measured at cost 
B)  As a contingent liability, initially measured at fair value 
C)  As an asset, initially measured at fair value 
D)  As an equity account, initially measured at cost 
A)  As an asset, initially measured at cost 
B)  As a contingent liability, initially measured at fair value 
C)  As an asset, initially measured at fair value 
D)  As an equity account, initially measured at cost

Question 2

Discuss the reasons for the existence of reverse acquisitions.

Accepted Answer

Reverse acquisitions:
- The acquisition

Question 3

If a contingent liability of a subsidiary is recognised in a business combination,on consolidation the group will record:

Accepted Answer

A)  a deferred tax liability. 
B)  a deferred tax asset. 
C)  a reduction in goodwill. 
D)  none of the above. 
A)  a deferred tax liability. 
B)  a deferred tax asset. 
C)  a reduction in goodwill. 
D)  none of the above.

Question 4

On consolidation,a group can only offset current tax assets against current tax liabilities when the group:

Accepted Answer

A)  has adopted tax consolidation. 
B)  has no partly owned subsidiaries. 
C)  operated wholly within Australia. 
D)  all of the above. 
A)  has adopted tax consolidation. 
B)  has no partly owned subsidiaries. 
C)  operated wholly within Australia. 
D)  all of the above.

Question 5

The fair value of financial instruments acquired in a business combination will be:

Accepted Answer

A)  market value in an active market. 
B)  an estimate of fair value. 
C)  either A or B. 
D)  none of the above. 
A)  market value in an active market. 
B)  an estimate of fair value. 
C)  either A or B. 
D)  none of the above.

Question 6

A Company purchases the net assets of B Company,which consists of land $2 100 000 and a liability of $100 000,paying by issuing 2 000 000 x $1,which is the fair value of the shares in A Company.A Company will record the acquisition as follows:

Accepted Answer

A)  $\begin{array} { l l } 
\text { DR Investment in B } & \$ 2,000,000 \
\text { CR Issued Capital } & \$ 2,000,000
\end{array}$ 
B)  $\begin{array} { l l } 
\text { DR Land } & \$ 2,100,000 \
\text { CR Liability } & \$ 100,000 \
\text { CR Cash } & \$ 2,000,000
\end{array}$ 
C)  $\begin{array} { l l } 
\text { DR Land } & \$ 2,100,000 \
\text { CR Liability } & \$ 100,000 \
\text { CR Issued Capital } & \$ 2,000.000
\end{array}$ 
D)  none of the above 
A)  $\begin{array} { l l } 
\text { DR Investment in B } & \$ 2,000,000 \
\text { CR Issued Capital } & \$ 2,000,000
\end{array}$ 
B)  $\begin{array} { l l } 
\text { DR Land } & \$ 2,100,000 \
\text { CR Liability } & \$ 100,000 \
\text { CR Cash } & \$ 2,000,000
\end{array}$ 
C)  $\begin{array} { l l } 
\text { DR Land } & \$ 2,100,000 \
\text { CR Liability } & \$ 100,000 \
\text { CR Issued Capital } & \$ 2,000.000
\end{array}$ 
D)  none of the above

Question 7

Goodwill is measured as the difference between book values and fair values
of the net identifiable assets acquired from the cost of acquisition.

Accepted Answer

A) True 
 B)False

Question 8

Explain the basis on which adjustments to deferred tax assets and liabilities arise on consolidation.

Accepted Answer

Deferred tax assets/liabilities on conso

Question 9

AASB 3 Business Combinations does not apply to joint arrangements.

Accepted Answer

A) True 
 B)False

Question 10

A contingent liability recognised in a business combination will be recorded:

Accepted Answer

A)  in the subsidiary's accounts. 
B)  in the group accounts. 
C)  either A or B. 
D)  none of the above. 
A)  in the subsidiary's accounts. 
B)  in the group accounts. 
C)  either A or B. 
D)  none of the above.

Question 11

An acquired entity may realize its brand name.

Accepted Answer

A) True 
 B)False

Question 12

All assets acquired in a business combination must be recognised at fair value.

Accepted Answer

A) True 
 B)False

Question 13

Where the value of an investment in a subsidiary increases,a deferred tax liability is generally not required to be recognised when:

Accepted Answer

A)  it is unlikely that profits of the subsidiary will be distributed as dividends. 
B)  it is unlikely that the subsidiary investment will be sold. 
C)  both A and B. 
D)  none of the above. 
A)  it is unlikely that profits of the subsidiary will be distributed as dividends. 
B)  it is unlikely that the subsidiary investment will be sold. 
C)  both A and B. 
D)  none of the above.

Question 14

Why does a group's taxable temporary difference decrease as a plant asset ages?

Accepted Answer

Depreciation expense creates a reduction

Question 15

The recorded equity of a subsidiary at acquisition will always equal the fair value of the subsidiary's net assets.

Accepted Answer

A) True 
 B)False

Question 16

A company purchases all the issued shares of B company for $2 000 000.The net assets of B Company consist of land $2,100 000 and a liability of $100 000.A company will record the acquisition as follows:

Accepted Answer

A)  DR Land $2 100 000 
CR Liability $100 000
CR Cash $2 000 000 
B)  DR Shares in B $2 000 000 
CR Issued Capital $2 000 000 
C)  DR Shares in B $2 000 000 
CR Cash $2 000 000 
D)  none of the above 
A)  DR Land $2 100 000 
CR Liability $100 000
CR Cash $2 000 000 
B)  DR Shares in B $2 000 000 
CR Issued Capital $2 000 000 
C)  DR Shares in B $2 000 000 
CR Cash $2 000 000 
D)  none of the above

Question 17

Explain why an acquiring company recognizes goodwill.

Accepted Answer

Goodwill is measured as the residual aft

Question 18

Accounting standard AASB3 Business Combinations does not apply to:

Accepted Answer

A)  joint ventures. 
B)  acquisition of assets not constituting a business. 
C)  business combinations involving entities under common control. 
D)  all the above. 
A)  joint ventures. 
B)  acquisition of assets not constituting a business. 
C)  business combinations involving entities under common control. 
D)  all the above.

Question 19

The choice of the method of recording fair value adjustments in a business combination will be influenced by what factors?

Accepted Answer

Choice of methods of recording fair valu

Question 20

Goodwill recorded by an acquiree in a business combination must be:

Accepted Answer

A)  recognised at fair value on acquisition. 
B)  recognised at carrying amount on acquisition. 
C)  not recognised in the business combination. 
D)  none of the above. 
A)  recognised at fair value on acquisition. 
B)  recognised at carrying amount on acquisition. 
C)  not recognised in the business combination. 
D)  none of the above.

According to AASB 3,how is goodwill acquired in a business combination recognised?

Discuss the reasons for the existence of reverse acquisitions.

If a contingent liability of a subsidiary is recognised in a business combination,on consolidation the group will record:

On consolidation,a group can only offset current tax assets against current tax liabilities when the group:

The fair value of financial instruments acquired in a business combination will be:

A Company purchases the net assets of B Company,which consists of land $2 100 000 and a liability of $100 000,paying by issuing 2 000 000 x $1,which is the fair value of the shares in A Company.A Company will record the acquisition as follows:

Goodwill is measured as the difference between book values and fair values of the net identifiable assets acquired from the cost of acquisition.

Explain the basis on which adjustments to deferred tax assets and liabilities arise on consolidation.

AASB 3 Business Combinations does not apply to joint arrangements.

A contingent liability recognised in a business combination will be recorded:

An acquired entity may realize its brand name.

All assets acquired in a business combination must be recognised at fair value.

Where the value of an investment in a subsidiary increases,a deferred tax liability is generally not required to be recognised when:

Why does a group's taxable temporary difference decrease as a plant asset ages?

The recorded equity of a subsidiary at acquisition will always equal the fair value of the subsidiary's net assets.

A company purchases all the issued shares of B company for $2 000 000.The net assets of B Company consist of land $2,100 000 and a liability of $100 000.A company will record the acquisition as follows:

Explain why an acquiring company recognizes goodwill.

Accounting standard AASB3 Business Combinations does not apply to:

The choice of the method of recording fair value adjustments in a business combination will be influenced by what factors?

Goodwill recorded by an acquiree in a business combination must be:

Text Objectives and Introduction to Consolidation

Principles of Consolidation

Intra-Group Transactions

Non-Controlling Interest

Partly-Owned Subsidiaries: Indirect Non-Controlling Interest

Consolidated Cash Flow Statements

Accounting for Joint Arrangements

Accounting for Associates and Joint Ventures: the Equity Method

Translation and Consolidation of Foreign Currency Financial Statements

Segment Reporting by Diversified Entities

Filters

Exam 3: Fair Value Adjustments and Tax Effects

According to AASB 3,how is goodwill acquired in a business combination recognised?

Discuss the reasons for the existence of reverse acquisitions.

If a contingent liability of a subsidiary is recognised in a business combination,on consolidation the group will record:

On consolidation,a group can only offset current tax assets against current tax liabilities when the group:

The fair value of financial instruments acquired in a business combination will be:

A Company purchases the net assets of B Company,which consists of land $2 100 000 and a liability of $100 000,paying by issuing 2 000 000 x $1,which is the fair value of the shares in A Company.A Company will record the acquisition as follows:

Goodwill is measured as the difference between book values and fair values of the net identifiable assets acquired from the cost of acquisition.

Explain the basis on which adjustments to deferred tax assets and liabilities arise on consolidation.

AASB 3 Business Combinations does not apply to joint arrangements.

A contingent liability recognised in a business combination will be recorded:

An acquired entity may realize its brand name.

All assets acquired in a business combination must be recognised at fair value.

Where the value of an investment in a subsidiary increases,a deferred tax liability is generally not required to be recognised when:

Why does a group's taxable temporary difference decrease as a plant asset ages?

The recorded equity of a subsidiary at acquisition will always equal the fair value of the subsidiary's net assets.

A company purchases all the issued shares of B company for $2 000 000.The net assets of B Company consist of land $2,100 000 and a liability of $100 000.A company will record the acquisition as follows:

Explain why an acquiring company recognizes goodwill.

Accounting standard AASB3 Business Combinations does not apply to:

The choice of the method of recording fair value adjustments in a business combination will be influenced by what factors?

Goodwill recorded by an acquiree in a business combination must be:

Text Objectives and Introduction to Consolidation

Principles of Consolidation

Intra-Group Transactions

Non-Controlling Interest

Partly-Owned Subsidiaries: Indirect Non-Controlling Interest

Consolidated Cash Flow Statements

Accounting for Joint Arrangements

Accounting for Associates and Joint Ventures: the Equity Method

Translation and Consolidation of Foreign Currency Financial Statements

Segment Reporting by Diversified Entities

Filters