01 November 2008

IFRS 3 (revised) business combinations

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. From what date could IFRS 3 (revised) affect the financial statements?

  2. How is goodwill measured under IFRS 3 (revised)?

  3. What is meant by full goodwill?

  4. A has acquired a subsidiary on 1 January 2008. The fair value of the net assets of the subsidiary acquired were $16m. A acquired 60% of the shares of the subsidiary $11m. The non-controlling interest was fair valued at $8m. Goodwill based on the partial goodwill method under IFRS 3 (revised) would be -

  5. A has acquired a subsidiary on 1 January 2008. The fair value of the net assets of the subsidiary acquired were $16m. A acquired 60 percent of the shares of the subsidiary $11m. The non-controlling interest was fair valued at $8m. Goodwill based on the full goodwill method under IFRS 3 (revised) would be

  6. Partial sale of an investment in a subsidiary which does not result in a change of control is treated as follows -

  7. A company has finalised the deferred tax calculation on 1 October 2008 in relation to its acquisition of a subsidiary on 1 January 2008. The adjustment required will -

  8. On 1 January 2008, A acquired a 60% interest in B for $80m .A already held a 10 percent interest which had been acquired for $12m but which was fair valued at $15m at 1 January 2008. The fair value of the non-controlling interest at 1 January 2008 was $47m and the fair value of the identifiable net assets of B was $130m. The goodwill would be as follows using the full goodwill method -

  9. On 1 January 2008, A acquired a 60% interest in B for $80m. A already held a 10% interest which had been acquired for $12m but which was fair valued at $15m at 1 January 2008. The fair value of the non-controlling interest at 1 January 2008 was $47m and the fair value of the identifiable net assets of B was $130m. A gain relating to the revaluation of the original equity interest would be recorded as follows -

  10. On 1 January 2008, A acquired a 60 percent interest in B for $80m. A already held a 10% interest which had been acquired for $12m but which was fair valued at $15m at 1 January 2008. The fair value of the non-controlling interest at 1 January 2008 was $47m and the fair value of the identifiable net assets of B was $130m. A gain relating to the revaluation of the original equity interest would be recorded as follows -

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