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A handout given by a review in accounting
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Seminar Akuntansi Keuangan
it is about business law. it is a notes for your to revise or learning about business law.
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ADVANCED ACCOUNTING PART 2
Business Combination (Theory) Instructions: Write
the letter that best corresponds to your answer in the booklet that was given to you. Do not write on the test questions and return it after use. Thank you and GODBLESS! 1. A business combination can be effected through a. Purchase of all of the assets and assumption of all of the liabilities of an acquiree by the acquirer b. Purchase of all or some of the voting shares of the acquiree, sufficient for the acquirer to obtain control over the acquiree c. Acquisition of control without transfer of consideration d. Any of these 2. After this type of business combination, the acquired entity ceases to exist as a separate legal or accounting entity. The acquirer records in its accounting records the assets acquired and liabilities assumed in the business combination. a. Stock acquisition b. Acquisition of control without transfer of consideration c. Combination of mutual entities d. Asset acquisition 3. It is a statutory type of business combination which occurs when two or more companies merge into one single entity which shall be one of the combining companies. a. Merger c. Stock acquisition b. Consolidation d. Mutual combination 4. It is a statutory type of business combination which occurs when two or more companies merge into a single entity which shall be the consolidated company. a. Merger c. Stock acquisition b. Consolidation d. Mutual combination 5. PFRS 3 requires a business combination to be accounted for using the a. Purchase method c. Goodwill method b. Acquisition method d. Control method 6. The acquisition method requires which of the following? a. Identifying the acquirer b. Determining the acquisition date c. Recognizing and measuring the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree d. Recognizing and measuring goodwill or gain from a bargain purchase e. All of these 7. It refers to the entity that obtains control after the business combination. a. Acquired c. Acquirer b. Acquiree d. All of these 8. According to PFRS 3, this is the date on which the acquirer obtains control over the acquiree. a. Control date c. Acquisition date b. Date of purchase d. Birthdate 9. According to PFRS 3, the acquisition date is normally the a. Control date c. Closing date b. Purchase date d. Valentine’s date 10. It is a business combination of two or more entities with similar business. a. Vertical combination c. Similar combination b. Identical combination d. Horizontal combination 11. The objective of PFRS 3 is a. To lend credibility to the financial statements which the users will use in making economic decisions in investing or lending in a business undergoing business combination.
ADVANCED ACCOUNTING PART 2 – BUSINESS COMBINATION (PART 2)
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AC-ACCTG 11 b. To give the users information who are not in the position to require the entity to prepare financial statements in their tailored needs. c. To improve relevance, reliability and comparability of the financial reporting of an entity in relation to a business combination by establishing the recognition and measurement principles and disclosure requirements. d. To provide relevant and faithfully represented financial information which abide with the fundamental qualitative characteristics that improves the proper recognition, measurement and disclosure requirements in a business combination. e. None of these 12. Which of the following is not a disadvantage of a business combination? a. Business combination brings monopoly in the market which may have a negative impact in the society. b. Management of the combined entity may become difficult due to incompatible internal cultures, systems, and policies. c. The combination will never result to business synergy. d. All of the above are disadvantages of a business combination. 13. PFRS 3 applies to transactions that meet the definition of a business combination. It does not apply to the following, which is the exception? a. The formation of a joint venture. b. A combination of entities or businesses under common control c. A combination of two sole proprietorship business entities. d. A combination of entities operating at di fferent levels in a marketing chain. 14. It occurs when the collaboration of two or more entities results to greater productivity than the sum of the productivity of each constituent working independently. a. Business combination c. Synergy b. Cooperation d. Competition 15. ABC Co. acquires 51% ownership interest in XYZ, Inc.’s preference shares. a. ABC is presumed to have obtained control over XYZ because it obtains more than 50%. b. A 100% ownership is need for ABC to obtain control over XYZ. c. It is non-determinable because it is not stated if what type of business combination is made but base on the problem it may be assumed that the combination ABC obtained control. d. ABC does not obtain control over XYZ.
END OF EXAMINATION!
ADVANCED ACCOUNTING PART 2 – BUSINESS COMBINATION (PART 2)
