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CIMAPRA19-F01-1 Exam - Topic 3 Question 12 Discussion

An entity acquires 100% of the equity shares in another entity.The consideration paid for the shares is less than the fair value of the net assets acquired.Which of the following is the correct accounting treatment for the difference between the consideration paid and the fair value of the net assets acquired, in accordance with IFRS 3 Business Combinations?
A) Recognise as a gain in the consolidated statement of profit or loss.
B) Recognise as a deferred credit and release to consolidated profit or loss over its useful economic life.
C) Recognise as a deduction from goodwill in the consolidated statement of financial position.
D) Recognise as a gain in the statement of changes in equity.

CIMAPRA19-F01-1 Exam - Topic 3 Question 12 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam
Question #: 12
Topic #: 3
[All CIMAPRA19-F01-1 Questions]

An entity acquires 100% of the equity shares in another entity.

The consideration paid for the shares is less than the fair value of the net assets acquired.

Which of the following is the correct accounting treatment for the difference between the consideration paid and the fair value of the net assets acquired, in accordance with IFRS 3 Business Combinations?

Show Suggested Answer Hide Answer
Suggested Answer: A

by Hubert at May 08, 2022, 08:36 PM

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Elenora
11 months ago
Not sure about A, seems too straightforward.
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Carma
11 months ago
A makes the most sense, right?
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Katheryn
11 months ago
Wait, really? I thought it would be B!
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Luann
11 months ago
I think it's C, you deduct it from goodwill.
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Luis
11 months ago
It's definitely A, you recognize it as a gain!
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Darrin
11 months ago
Okay, I think I've got this. The key is to use the thief client in the specified folder to remotely connect to the server and check the file count. As long as I follow the instructions carefully, I should be able to handle this.
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Ronny
11 months ago
I think low-priority risks can be ignored, but we might need to keep an eye on them just in case.
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Percy
12 months ago
Okay, I've got this. The question is asking about the compliance status of the cloud customer, not the client. So options A and B can be eliminated since they mention the client. I'm leaning towards D as the best answer.
upvoted 0 times
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Valda
12 months ago
Hmm, this seems like a tricky one. I'll need to think through the options carefully to make sure I understand the right approach.
upvoted 0 times
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