In Rare Cases the Cost of Purchasing a Business Combination

question 15

Multiple Choice

In rare cases the cost of purchasing a business combination may be less than the sum of the fair values of the identifiable assets and liabilities acquired bargain purchase) .The true statement concerning the requirements of IFRS 3/AASB 3 in this situation is:

• A)The buyer and the seller must adjust the value to the consideration to eliminate the bargain purchase
• B)Any bargain purchase difference should be eliminated by adjusting the values of the assets acquired as it is not possible to recognise a bargain purchase
• C)A genuine bargain purchase should be recognised immediately as a gain that is an addition to profit
• D)A genuine bargain purchase should be recognised progressively as an addition to profit over a 20 year period

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