Reference no: EM132593476

Problem 1: Unrealised profit in the opening inventory of a financial period is adjusted in the consolidation worksheet by a:

Select one or more:

a. debit to retained earnings.

b. credit to retained earnings.

c. credit to inventory.

d. debit to inventory.

Problem 2: In respect to a business combination, a gain on bargain purchase arises where the acquirer's interest in the net fair value of the identifiable assets and liabilities acquired is greater than the consideration transferred by the acquirer to the acquiree.

Select one or more:

a. TRUE

b. FALSE

Problem 3: When one entity controls another entity, the business combination results in which of the following types of relationship?

Select one or more:

a. Parent-subsidiary

b. Investor-investee

c. Investor-associate

d. Parent-child

Problem 4: Which of the following statements is incorrect?

Select one or more:

a. The business combination valuation reserve is an account recorded in the subsidiary's records.

b. The acquisition analysis may include the recognition of assets and liabilities not recognised in the subsidiary's records.

c. The acquisition analysis will determine whether any goodwill or gain on bargain purchase has arisen as a part of the business combination.

d. An acquisition analysis is prepared at acquisition date to identify the identifiable assets and liabilities of the subsidiary at fair value.

Problem 5: Ying Limited acquires the net assets of Yang Limited for a cash consideration of $50 000. One half is to be paid on acquisition date and one half is payable in one year's time. The appropriate discount rate is 5% p.a. The present value of the cash outflow in one year's time is:

Select one or more:

a. $23 810.

b. $25 000.

c. $26 190.

d. $30 000.