AASB 3 Specifies That Where a Parent Entity Purchases Additional

question 2

Multiple Choice

AASB 3 specifies that where a parent entity purchases additional shares in a subsidiary over time:

• A) No further goodwill on purchase may be recognised. Any excess payment over the fair value of the additional net assets purchased is to be written off in the period of the purchase.
• B) Each purchase of shares is to be treated as part of a single, combined purchase so that the amount of goodwill reported in the consolidated financial statements cannot be increased at the discretion of the controlling entity.
• C) Goodwill would be recognised by a single consolidation journal entry at that point in time when the parent entity ultimately gains control of the subsidiary.
• D) The parent entity may choose between treating the purchases separately or combining them into a single transaction.
• E) None of the given answers.

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Definitions:

Cell Membrane

The semipermeable membrane surrounding the cytoplasm of a cell, controlling the passage of substances in and out.

Concentration Gradient

The variation in the distribution of molecules or ions across a space or membrane, which often dictates the direction of particles’ movement (e.g., high to low concentration).

High Concentration

A state or condition of having a large amount of substance in a certain volume or area, or the ability to focus intensely on a task or activity.

Low Concentration

A situation or state where there is a reduced amount of a substance present in a solution or mixture compared to other components.