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1. In relation to goodwill arising from a business combination, which one of the following statements is in accordance with IFRS 3 Business Combinations?CorrectIncorrect
2. Which one of the following statements is not a key feature of the acquisition method?CorrectIncorrect
5. On the acquisition of a subsidiary, purchased goodwill shouldCorrectIncorrect
6. Which of the following does not result in a business combination for Pryor Ltd.?CorrectIncorrect
7. According to a survey of CFOs, what is the main reason for mergers?CorrectIncorrect
8. Which of the following acquisition-related costs are not expensed in the period incurred?CorrectIncorrect
9. In acquiring Au Ltd., Trinh Ltd. included a provision for contingent consideration. The value of this consideration will be determined by an event that will occur after the acquisition date. How should the recognition of the amount of the contingency be accounted for?CorrectIncorrect
10. Which of the following is not a classification for intangible assets under IFRS 3?CorrectIncorrect
11. Which of the following is not an acceptable method for valuing intangible assets?CorrectIncorrect
12. When would it be more advantageous for a purchaser to acquire a company’s assets rather than its shares?CorrectIncorrect
13. Lang Ltd. acquired 100% of Linford Ltd. through a direct exchange. In the exchange, Lang issued $7,500,000 in shares to Linford. What journal entry must Lang record to reflect the exchange?CorrectIncorrect
14. Lang Ltd. acquired 100% of Linford Ltd. through a direct exchange. In the exchange, Lang issued $7,500,000 in shares to Linford. What journal entry must Linford record to reflect the exchange?CorrectIncorrect
15. Under IAS 16, under what circumstances can the revaluation model be used to measure property, plant, and equipment (PPE)?CorrectIncorrect
16. Kora Co., a public enterprise, is a subsidiary of Bentel Ltd., a private enterprise. Bentel has chosen to report Kora using the equity method. In doing so what information must Bentel disclose in its notes to the financial statements?CorrectIncorrect
17. Rossy Ltd. acquired 100% of Zia ltd. in 20X3. At the acquisition date, the following appeared under the Property, Plant, and Equipment sections of the respective separate-entity statements of financial position: Rossy Zia Equipment 1,000,000 500,000 Accumulated depreciation (350,000) (100,000) At the acquisition date, Zia’s equipment has a fair value of $425,000. What is the balance of the accumulated depreciation on Rossy’s consolidated statement of financial position at the acquisition date?CorrectIncorrect
18. Gibson Ltd. has investments in a number of businesses. Each of the investments is individually immaterial. How should IFRS 3 disclosures be made for these investments?CorrectIncorrect
19. Boyce Ltd. made an investment in a joint venture. After properly making an allocation for a fair value adjustment, there was $25,000 remaining. How should this $25,000 be reported?CorrectIncorrect
20. IFRS 3:CorrectIncorrect
21. Under IFRS 3, acquired contingent liabilities are:CorrectIncorrect
22. Goodwill should be:CorrectIncorrect
23. Negative goodwill should be:CorrectIncorrect
24. The result of nearly all combinations is that the:CorrectIncorrect
25. A combination may involve:
(i) The purchase of the equity of another undertaking.
(ii) The purchase of all the net assets of another undertaking.
(iii) The assumption of the liabilities of another undertaking.
(iv) The purchase of some of the net assets of another undertaking, that together form one or more businesses.
(v) The purchase of assets from a firm in liquidation.CorrectIncorrect
26. Applying the acquisition method involves the following steps:
i Identifying an acquirer.
ii Measuring the cost of the combination.
iii Allocating, at the acquisition date, the cost of the combination to the assets acquired and liabilities and contingent liabilities assumed.
iv Amortising the goodwill.CorrectIncorrect
27. Control is the power:CorrectIncorrect
28. To identify an acquirer, indications that one exists are:.
i If the fair value of one of the undertakings is greater than that of the other, the greater is likely to be the acquirer.
ii If the combination is effected through an exchange of voting ordinary equity instruments for cash or other assets, the undertaking giving up cash or other assets is likely to be the acquirer.
iii If the combination results in the management of one of the undertakings being able to run the combined undertaking, the undertaking whose management is able to dominate is likely to be the acquirer.
iv In a combination effected through an exchange of shares, the undertaking that issues the shares is normally the acquirer.
v In a combination effected through an exchange of shares, the older undertaking is normally the acquirer.CorrectIncorrect
29. When a new undertaking is formed to effect a combination:CorrectIncorrect
30. The cost of a combination includes:
(i) Liabilities incurred or assumed by the acquirer.
(ii) Professional fees paid to accountants.
(iii) Legal advisers’ fees.
(iv) Valuers’ fees.
(v) General administrative costsCorrectIncorrect
31. Future losses are:CorrectIncorrect
32. For an adjustment to the cost of the combination contingent on future events, the acquirer must include the amount of that adjustment in the cost of the combination at the acquisition date, if the adjustment is:CorrectIncorrect
33. The acquirer may be required to make a subsequent payment to the seller, as compensation for a reduction in the value of the shares issued for control of the acquiree.
In such cases:CorrectIncorrect
34. The acquirer must allocate the cost of a combination, by recording the acquiree’s identifiable:
(iii) Contingent liabilities.
(iv) Non-current assets that are as ‘held for sale’.
(v) Non-current liabilities that are as ‘held for sale’.CorrectIncorrect
35. A building has a cost in the books of the acquiree of $200m. It is being depreciated over 20 years, the length of the lease. After 15 years, you buy the company and fair value the property at $400m. In the consolidated books of account, annual depreciation will be recorded as:CorrectIncorrect
36. You buy a company. You have paid, have a binding agreement, but some registrations have yet to be completed before you become the legal owner.CorrectIncorrect
37. Non-controlling (Minority) interest in the acquiree is stated:CorrectIncorrect
38. An acquiree’s restructuring plan, whose execution is conditional upon its being acquired in a combination is:CorrectIncorrect
39. A tax benefit arising from the acquiree’s tax losses that was not recorded by the acquiree:CorrectIncorrect
40. The acquirer records an in-process research and development project of the acquiree, if the project meets the definition of an intangible asset and its fair value can be measured reliably:CorrectIncorrect
41. The carrying amount of an item classified as an intangible asset that was acquired in a combination, if that intangible asset does not at that date meet the identifiability criterion in IAS 38, for which the agreement date was before 31 March 2004, is recorded:CorrectIncorrect
42. After their initial recognition, the acquirer must measure contingent liabilities at:CorrectIncorrect
43. Goodwill acquired in a combination must be:CorrectIncorrect
44. To eliminate amortisation on previously-recorded goodwill:CorrectIncorrect
45. To eliminate previously-recognised negative goodwill:CorrectIncorrect
46. When provisional values of net assets need to be amended, the difference goes to:CorrectIncorrect
47. When provisional values of net assets need to be amended, the differences will be applied:CorrectIncorrect
48. Adjustments to the initial accounting for a combination, after the measurement period is complete, must be recorded:CorrectIncorrect
49. A reverse acquisition is:CorrectIncorrect
50. In a reverse acquisition, consolidated accounts are prepared in the name of:CorrectIncorrect
51. In a reverse acquisition, the opening retained earnings are those of:CorrectIncorrect
52. In a reverse acquisition, the comparative figures are those of:CorrectIncorrect
53. In a reverse acquisition, the minority interests have shares in:CorrectIncorrect
54. In a reverse acquisition, the company whose assets are revalued are those of:CorrectIncorrect
55. ‘Small’ buys ‘Big’ in a reverse acquisition. Small had 500 shares issued prior to the merger. It then issued 10.000 shares to Big’s owners.
For calculating the EPS, the number of shares for the period prior to the merger is:CorrectIncorrect
56. ‘Small’ buys ‘Big’ in a reverse acquisition. Small had 500 shares issued prior to the merger. It then issued 10.000 shares to Big’s owners. Comparative EPS figures for previous figures should use Big’s earnings for the period and divide them by:CorrectIncorrect