This distinguishes a business combination from other types of investment transactions. Obtaining of control Acquisition of stocks Acquisition of assets All of these
This distinguishes a business combination from other types of investment transactions.
Obtaining of control
Acquisition of stocks
Acquisition of assets
All of these
The entity that obtains control over another business in a business combination called the
Controller
Acquiree
Acquirer
Controllee
Entity A obtained control of Entity B in a business combination. When computing for
Entity B’s research and development projects that were already charged as expenses, but have a fair value as at the acquisition date.
Entity B’s unrecorded identifiable intangible assets
Operating lease between Entity A and Entity B, wherein Entity B is the lessee.
Entity A’s expected costs of exiting or terminating some or all of Entity B’s activities after the combination.
A
Is not accounted for by the acquirer if the contingent liability has an improbable outflow of economic resources.
Is recognized even if it has an improbable outflow of economic resources for as long as there is present obligation and the fair value of the obligation can be measured reliably
Is recognized only if there is present obligation, probable outflow of economic resources, and can be measured reliably.
Are not accounted for by the acquirer if the contingent liability has an improbable outflow of economic resources and recognized only if there is present obligation, probable outflow of economic resources, and can be measured reliably.
A gain on a bargain purchase is
Recognized in profit or loss in the year of acquisition
Amortized in profit or loss over the lower of its legal life and estimated useful life
Recognized in profit or loss in the year of acquisition but only after reassessment of the assets acquired and liabilities assumed in the business combination
None of the above
Which of the following assets of an acquiree may not be included when computing for the goodwill arising from a business combination?
Capitalized kitchen utensils and equipment
Intangible assets not previously recorded
Research and development costs charged as expenses
Goodwill
Direct cost incurred in a business combination are
Capitalized
Expensed
Capitalized, except for
Expensed, except for costs of issuing equity and debt instruments
Entity A and Entity B combined their businesses. The acquirer in the business combination is not clearly identifiable. Which of the following is not an indicator that Entity A is the acquirer?
Entity A is the initiator of the business combination.
Entity A’s former owners receive the largest portion of the voting rights in the combined entity.
Entity A’s former management team dominates the management of the combined entity.
Entity C, a new entity, is formed and Entity C transfers cash to Entity A and Entity B
Restructuring provisions
Are generally not recognized as part of business combination unless the acquiree has, at the acquisition date, an existing liability for restructuring that has been recognized in accordance with PAS 37
That do not meet the definition of a liability at the acquisition date are recognized as post-combination expenses of the combined entity when the costs are incurred
Generally increases goodwill
Are generally not recognized as part of business combination unless the acquiree has, at the acquisition date, an existing liability for restructuring that has been recognized in accordance with PAS 37 and do not meet the definition of a liability at the acquisition date are recognized as post-combination expenses of the combined entity when the costs are incurred
The identifiable assets acquired and liabilities assumed in a business combination are generally measured at
Acquisition-date fair values
Previous carrying amounts
Fair value less cost to sell
Cost
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