In Rare Cases the Cost of Purchasing a Business Combination

question 1

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 true?

• 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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Definitions:

Collectivism-Societal

A cultural value that emphasizes the importance of groups and collective well-being over individual achievement.

GLOBE Model

A research framework for understanding cross-cultural leadership behavior, indicating the influence of societal culture on managerial practices.

Collective Action

A coordinated effort undertaken by a group of individuals working together to achieve a common goal or address a shared issue or concern.

Uncertainty Avoidance

A cultural dimension that describes the extent to which individuals in a society are comfortable with ambiguity and risk.