Prior to the Introduction of AASB 138 Companies Had Found

question 23

Multiple Choice

Prior to the introduction of AASB 138 companies had found ways to circumvent the requirements of the revised (1996) version of AASB 1013.These methods included:

• A) using the inverted sum-of-digits amortisation technique.
• B) calculating goodwill as the difference between the carrying value of the net assets of the acquired company and the consideration paid.
• C) requiring the purchased company to make excessive provisions for restructuring costs to be undertaken after the company is purchased.
• D) attributing the excess of the cost of acquisition over the fair value of the net identifiable assets of the company acquired to brands, licences and other identifiable intangible assets.

---

Definitions:

Exercise Price

The price at which the holder of an options contract may buy or sell the underlying security.

Share Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell shares at a set price within a specified period.

Fair Value

The financial gain from a sale of an asset or the investment in transferring a liability in an orderly exchange among market participants on the date set for assessment.

Remuneration Expense

The total cost incurred by an entity for the payment of salaries, wages, and other forms of compensation to employees.