In Rare Cases the Cost of Purchasing a Business Combination

question 13

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) . Which of the following statements concerning the requirements of IFRS 3/AASB 3 in this situation is correct?

• A) A genuine bargain purchase should be recognised immediately as a gain that is an addition to profit.
• B) The buyer and the seller must adjust the value to the consideration to eliminate the bargain purchase.
• C) 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.
• D) A genuine bargain purchase should be recognised progressively as an addition to profit over a 5-year period.

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Definitions:

Economic Structures

Economic structures refer to the arrangement and organization of economic agents and institutions in a society, including how resources are distributed and managed.

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Organized ways in which a society creates and maintains political authority, including governments, political parties, and legal systems.

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Someone who approaches the world by using knowledge that is practical or taken for granted.

Everyday Life

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