Where the Consideration Transferred Is Less Than the Fair Value

question 35

Multiple Choice

Where the consideration transferred is less than the fair value of the identifiable net assets and contingent liabilities acquired, the item must be recognised in the consolidation worksheet as:

• A) a transfer to the business combination valuation reserve.
• B) goodwill.
• C) an increase in the 'Shares in subsidiary' asset.
• D) a gain on bargain purchase.

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Definitions:

Age Misrepresentation

The act of deliberately falsifying one's age, usually for the purpose of gaining access to certain privileges or avoiding restrictions.

Insurance Application

The form or process through which a potential insured provides information for an insurance company to evaluate and decide on providing coverage.

Beneficiary Payment

A payment made to a person or entity designated to receive benefits from a contract, such as insurance policy or a will.

Surrender

A mutual agreement between a landlord and a tenant in which the lessee returns his or her interest in the premises to the landlord.