Tutorial_and_Practice_Questions_Lecture_Topics_8

Tutorial_and_Practice_Questions_Lecture_Topics_8 - Week 8...

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Week 8 13 Sept. (SH) Lecture Topic 8 Business Combinations and Impairment • Identify various forms of business combination • Explain the acquisition method of accounting • Recognise assets acquired and liabilities assumed • Explain impairment testing and meaning of recoverable amount • Identify a cash generating unit CGU • Determine the allocation of an impairment loss to assets in the CGU and record necessary journal entries Tutorial Questions: Picker, Chapters 12 & 13 Problem 12.1 Practice Questions: Picker, Chapters 12 & 13 DQ 12.2, 12.7, 12.8, 13.12 Exercise 12.4, 12.6 and 13.1 DQ 12.2. Discuss the importance of identifying the acquisition date. Acquisition date is the date on which the acquirer obtains control of the acquiree. Important because on this date: the fair values of the identifiable assets acquired and liabilities assumed are measured. the fair value of the consideration transferred is measured the goodwill or gain on bargain purchase is calculated. DQ 12.7. Explain the key steps in the acquisition method. AASB 3 para 5: 1. identify the acquirer 2. determine the acquisition date 3. recognise and measure the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree 4. recognise and measure goodwill or a gain from a bargain purchase. DQ12.8. How is the consideration transferred calculated? AASB 3 para 37 states that the consideration transferred shall be - measured at fair value, determined at acquisition date, and - calculated as the sum of the fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer, and the equity interests issued by the acquirer.
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Exercise 12.4 Accounting by an acquirer SNAKE LTD – SWAN LTD (a) FV of shares is $1.80 per share
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Tutorial_and_Practice_Questions_Lecture_Topics_8 - Week 8...

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