Key questions to consider when determining the appropriate consolidation adjustment entries include the following except for: a. What has been recorded by the legal entities? b. What is the tax effect of the adjustments made? c. Does the transaction involve the parent entity selling assets to the subsidiary, or the subsidiary selling assets to the parent entity? d. Is this a prior period or a current period transaction?
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- Which of the following is not considered in the determination of Total Assets after business combination? Group of answer choices a.Book value of the acquirer’s total assets. b.Fair value of the acquiree’s total assets. c.Expenses that are actually paid in relation to business combination d.Contingent considerationWhich of the following is incorrect regarding measurement period? a. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. b. During the measurement period, the acquirer shall also recognise additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that date. c. The measurement period ends as soon as the acquirer receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. d. During the measurement period, the acquirer shall prospectively adjust the provisional amounts recognised at the acquisition date…A consolidation adjustment will have a tax effect if: Select one: A. It adjusts the carrying amount of an asset B. It adjusts the carrying amount of liabilityC. All of the above D. It recognizes assets and liabilities not recorded in accounting records of groupcompanies
- Describe the presentation of the consolidated balance sheet and income statement indicatinga) The inclusion of goodwill and gain on acquisitionb) Disclosures necessary to the financial statements.c) The impairment of goodwill. (Mention any topics / subtopics from the FASB codification if used)During the measurement period, which of the following may affect the amount ofgoodwill from business combination? A.New information regarding estimates in the contingent consideration that are not existing atthe date of acquisitionB.Nothing can affect the amount of goodwill.C.New information regarding estimates in the contingent consideration that are existing at thedate of acquisition.D.New information regarding estimates in the contingent considerationWhich of the following is not an application of the acquisition method?a) Measuring the consideration transferred at fair value.b) Determining the acquisition date which is the date the acquirer obtains control over acquiree.c) Identifying the acquirer which is the entity that obtains control over another business in a business combination.d) Measuring the non-controlling interest at the NCI’s proportionate share in the acquiree’s net identifiable assets or fair value, whichever is higher.
- for the following intercompany transaction state the principle to be used in accounting for intercompany gains on current and future consolidated income statements: Gains on the sale of depreciable fixed assetsWhich statement is incorrect regarding reclassification of financial assets? An entity shall restate any previously recognized gains, losses (including impairment gains or losses) or interest. Reclassifications are only permitted on the change of an entity's business model and are expected to occur only infrequently. None of these. An entity shall account for transfers between categories prospectively, at the beginning of the period after the change in the business model.Which of the following is not considered in the determination of Total Assets after business determination? A. Book Value of the Acquirer's Total Assets B. Fair Value of the Acquiree's Total Assets C. Expenses that are actually paid in relation to business combination D. Contingent Consideration
- When an entity sells a non-current asset at a profit to another entity within the same group, which of the following adjustments is necessary on consolidation? Select one: a. Dr Asset, DR Gain on sale b. Dr Gain on sale, CR Asset c. Dr Gain on sale, CR Cash d. Dr Asset, CR CashWhich of the following is not an application of the acquisition method? a. Measuring the non-controlling interest at the non-controlling interest’s proportionate share in the acquiree’s net identifiable assets or fair value, whichever is higher. b. Measuring the consideration transferred at fair value. c. Identifying the acquirer which is the entity that obtains control over another business in a business combination. d. Determining the acquisition date which is the date the acquirer obtains control over acquiree.Which statement is incorrect regarding reclassification of financial assets? A. Reclassifications are only permitted on the change of an entity's business model and are expected to occur only infrequently. B. None of these. C. An entity shall restate any previously recognized gains, losses (including impairment gains or losses) or interest. D. An entity shall account for transfers between categories prospectively, at the beginning of the period after the change in the business model.