Accounting for Cash and Deferred Payments Quiz

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What is used as the discount rate when calculating the fair value of a deferred payment?

Inflation rate

Prime lending rate

Savings account rate

Borrowing rate (correct)

How are non-monetary assets like property, plant, and equipment treated in business combinations?

Realizing a loss equal to carrying amount

Excluding them from the transaction

Realizing a gain or incurring a loss based on fair value (correct)

Earning revenue equal to carrying amount

What is the best way to measure the fair value of liabilities undertaken in a business combination?

Historical cost

Future market value

Book value

Present value of future cash flows (correct)

In a business combination, if an acquirer issues its own shares as consideration, what should be determined about those shares?

Fair value at the date of exchange (A) Signup and view all the answers

When is the fair value of cash and cash equivalents easily determinable?

If there are no other assets involved in the exchange (A) Signup and view all the answers

What is excluded when calculating the fair value of liabilities undertaken in a business combination?

Expected future losses and costs as a result of the combination (C) Signup and view all the answers

What happens when contingent consideration is classified as an equity instrument?

The original amount is remeasured (B) Signup and view all the answers

How is goodwill calculated under PFRS 3 Revised?

As the difference between the fair value of consideration transferred and the identifiable assets acquired (A) Signup and view all the answers

What does non-controlling interest refer to in a subsidiary?

The equity in a subsidiary not attributable to a parent (D) Signup and view all the answers

Under PFRS 3 Revised, what is the valuation approach for identifiable tangible assets assumed?

Recognition only if associated future benefits are probable and fair value can be measured reliably (A) Signup and view all the answers

What does 'previously held equity interest in the acquiree' refer to?

Equity held by the acquirer before the business combination (B) Signup and view all the answers

How is deferred payment treated when contingent consideration is cash or other assets paid or owed?

Recognized in profit or loss when the contingent consideration changes (D) Signup and view all the answers

When recognizing intangible assets, what test is used to determine if their fair value can be measured reliably?

Reliability test (D) Signup and view all the answers

How are liabilities recognized according to the text?

By passing a reliability test (C) Signup and view all the answers

What type of test is used to recognize contingent liabilities?

Reliability test (A) Signup and view all the answers

In a business combination, what may lead to the recognition of contingent liabilities in the acquirer's records?

Applying the fair value measurement test (A) Signup and view all the answers

What components make up the sum when applying the acquisition method for recognizing goodwill and gain on bargain purchase?

$10 + 5/2$ (B) Signup and view all the answers

How are identifiable assets and liabilities recognized in the acquisition method?

By applying the reliability test (D) Signup and view all the answers