PFRS 3 and 5

One entity can gain control of another entity through direct and/or indirect ownership of that entity.

• TRUE

• FALSE

A business combination can be accomplished by one entity making an investment in the debt securities of another entity.

• TRUE

• FALSE

In a business combination carried out solely through the exchange of equity, the entity whose owners have the larger voting rights in the combined entity is likely the acquirer entity.

• TRUE

• FALSE

Costs incurred in carrying out a business combination should be included as part of the cost of the acquired business.

• TRUE

• FALSE

If a non-cash asset is transferred as consideration in a business combination, generally the asset must be transferred at its carrying value.

• TRUE

• FALSE

If a non-cash asset is transferred as a consideration in a business combination, but the asset remains under the control of the acquirer, the asset should be transferred at carrying value.

• TRUE

• FALSE

Both goodwill and a bargain purchase can occur in the same business combination.

• TRUE

• FALSE

The gain from a bargain purchase should be recognized in the consolidated statements of the combined entity as attributable to the acquirer.

• TRUE

• FALSE

Additional consideration paid to former shareholders of an acquired entity based on post-combination earnings is treated as part of the cost of the acquired entity.

• TRUE

• FALSE

Goodwill existing on the books of the acquired entity will be recognized as an asset by the acquirer.

• TRUE

• FALSE