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Exam 25: Business Combinations

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Question 1

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Which of the following items would not be recognised as an intangible asset in a business combination?

A) experienced marketing team.
B) newspaper mastheads.
C) patents.
D) trademarks.

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Question 2

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The net amount of employee benefit liabilities acquired in a business combination are measured by using the:

A) estimated total of future cash outflows, undiscounted.
B) face value of the liabilities.
C) present value method.
D) cash method.

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Question 3

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Under AASB 3/IFRS 3, the method of accounting for a business combination is the:

Goodwill is measured as the difference between the:

Kingscliff Limited estimated that the net present value of future cash flows from machinery acquired in a business combination is $70 000. The cost of replacing the machinery is estimated to be $76 000. The machinery has been independently appraised at a value of $68 000. A similar item of machinery cost the acquirer $78 000 last year. The value at which the machinery will be recognised when recording the business combination is:

If shares are issued as part of the consideration paid, transactions costs such as brokerage fees may be incurred. Under AASB 3/IFRS 3 Business Combinations, the appropriate accounting treatment for such costs in the records of the acquirer is a debit to:

Goodwill arising in a business combination is classified as a(n) :

Byron Limited estimated the net present value of future cash flows from specialised equipment acquired under a business combination to be $120 000. A replacement cost for the equipment is estimated to be $132 000. The equipment has been independently appraised at a value of $122 000. A similar item of equipment cost the acquirer $118 000 last year. What is the value for recognition of the equipment under a business combination?

In a business combination, the acquirer is the party that:

The consideration transferred in a business combination is measured as the fair value of the:

The information contained within Appendix B of AASB 3/IFRS 3 in relation to disclosure:

Mary Limited acquired the identifiable assets and liabilities of Joan Limited for $530 000. The items acquired, stated at fair value, are: equipment $296 000; inventories $160 000; accounts receivable $104 000; patents $60 000; accounts payable $80 000. The difference on acquisition is:

A business combination is defined as:

In a business combination, the acquiree is the party that:

The acquisition date for a business combination is the date on which:

AASB 3/IFRS 3 is relevant when accounting for a business combination that:

For a tangible asset to be recognised by an acquirer under a business combination it must be probable that future economic benefits will flow to the acquirer and:

When accounting for a business combination a contingent liability is recognised if:

Where the acquirer purchases assets and assumes liabilities of another entity it does not need to consider measurement of:

Appendix B of AASB 3/IFRS 3 requires disclosure of which of the following? I. A qualitative description of the factors that make up goodwill. II. Details of contingent consideration. III. The date of exchange. IV. Carrying amounts of assets and liabilities in business combinations where shares are acquired.