Question 1

Fair value adjustments relate to:

Accepted Answer

A)  differences between fair value and carrying amount of parent assets and liabilities. 
B)  differences between fair value and carrying amount of subsidiary assets and liabilities. 
C)  both A and B. 
D)  none of the above. 
A)  differences between fair value and carrying amount of parent assets and liabilities. 
B)  differences between fair value and carrying amount of subsidiary assets and liabilities. 
C)  both A and B. 
D)  none of the above.

Question 2

If the carrying amount of an asset of a subsidiary in a business combination is increased to fair value,on consolidation the group will record:

Accepted Answer

A)  a deferred tax liability. 
B)  a deferred tax asset. 
C)  a gain on bargain purchase. 
D)  none of the above. 
A)  a deferred tax liability. 
B)  a deferred tax asset. 
C)  a gain on bargain purchase. 
D)  none of the above.

Question 3

A gain on bargain purchase arising in a business combination does not have any deferred tax implications.

Accepted Answer

A) True 
 B)False

Question 4

Discuss the differential treatment for tax purposes of investments in subsidiaries compared to other assets.

Accepted Answer

Tax treatment of investment in subsidiar

Question 5

Accounting standard AASB 3 Business Combinations requires the recognition of contingent assets in a business combination.

Accepted Answer

A) True 
 B)False

Question 6

In the year ended June 30 20X7,Woof Ltd acquired the assets and assumed the liabilities of the Doggie Biscuits operation from Fido Ltd for $10 000 000.At the date of acquisition,the fair values of the net separable assets and liabilities of the operation were $8 000 000 and $1 000 000 respectively.Based on this information,the transaction has resulted in:

Accepted Answer

A)  a business combination of Woof Ltd and Doggie Biscuits. 
B)  the acquisition of certain assets and liabilities, which is not a business combination since Doggie Biscuits is not a business but simply part of the Fido Ltd business. 
C)  the acquisition of certain assets and liabilities, which is not a business combination since Doggie Biscuits is not managed to provide a return to investors but only to provide a return to Fido Ltd. 
D)  none of the above. 
A)  a business combination of Woof Ltd and Doggie Biscuits. 
B)  the acquisition of certain assets and liabilities, which is not a business combination since Doggie Biscuits is not a business but simply part of the Fido Ltd business. 
C)  the acquisition of certain assets and liabilities, which is not a business combination since Doggie Biscuits is not managed to provide a return to investors but only to provide a return to Fido Ltd. 
D)  none of the above.

Fair value adjustments relate to:

If the carrying amount of an asset of a subsidiary in a business combination is increased to fair value,on consolidation the group will record:

A gain on bargain purchase arising in a business combination does not have any deferred tax implications.

Discuss the differential treatment for tax purposes of investments in subsidiaries compared to other assets.

Accounting standard AASB 3 Business Combinations requires the recognition of contingent assets in a business combination.

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

Fair value adjustments relate to:

If the carrying amount of an asset of a subsidiary in a business combination is increased to fair value,on consolidation the group will record:

A gain on bargain purchase arising in a business combination does not have any deferred tax implications.

Discuss the differential treatment for tax purposes of investments in subsidiaries compared to other assets.

Accounting standard AASB 3 Business Combinations requires the recognition of contingent assets in a business combination.

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