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:

Authentic Leadership

A leadership style in which the leader is true to themselves while leading, possessing awareness, transparency, integrity, and ethics.

Oral Reasoning

The process of thinking and expressing thoughts verbally, often used to solve problems or articulate ideas.

Self-Awareness

The conscious knowledge of one's own character, feelings, motives, and desires.

Relational Transparency

A leadership behavior that involves being open and honest in one’s communications and actions, fostering trust and authenticity.