Under AASB 3/IFRS 3 Business Combinations, a Gain on Bargain

question 12

Multiple Choice

Under AASB 3/IFRS 3 Business Combinations, a gain on bargain purchase arises when the acquirer's interest in the fair value of the acquiree's identifiable assets and liabilities is:

• A) less than the carrying amount of the net assets acquired.
• B) less than the consideration transferred.
• C) greater than the consideration transferred.
• D) more than the book values of the identifiable assets acquired.

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Definitions:

High-Dividend Clientele

A group of investors who prefer stocks that pay high dividends because they seek steady income from their investments.

Arbitrage Clientele

A group of investors who seek to profit from price differentials of the same asset in different markets, without risk.

Homemade Dividends

The concept that investors can create their own dividend policy by selling a portion of their portfolio of equities, instead of relying on the company's dividend payments.

Dividend Payout

The part of a company's profits that is paid out to shareholders as dividends.