MCQ Business Combination MCQ Business Combination Name * Branch * 1. Which are the three elements of business combination? * a. Input, Resource, Output b. Input, Process, Output c. Process, Return, Output d. Input, Process, Control 2. Following the accounting concept of a business combination, a business combination occurs when a company acquires an equity interest in another entity and has * a. At least 20% ownership in the entity b. More than 50% ownership in the entity c. 100% ownership in the entity d. Control over the entity, irrespective of the percentage owned 3. ABC Sdn. Bhd. paid RM100,000 in fees to its accountants and lawyers in acquiring a local company. ABC Sdn. Bhd. will treat the RM100,000 as * a. An expense for the current year b. Prior period adjustment to retained earnings c. Additional cost to investment on the consolidated balance sheet d. A reduction in additional paid-in capital 4. In a business combination, which of the following will occur? * a. All identifiable assets and liabilities are recorded at fair value at the date of acquisition b. No measure goodwill or a gain from a bargain purchase c. Goodwill is recorded if the fair value of the net assets acquired exceeds the book value of the net assets acquired d. None of the above is correct 5. In a business combination, when the fair value of identifiable net assets acquired exceeds the investment cost, which of the following statements is correct? * a. A gain from a bargain purchase is recognized for the amount that the fair value of the identifiable net assets acquired exceeds the acquisition price b. The difference is allocated first to reduce proportionately (according to market value) non-current assets, then to non-monetary current assets, and any negative remainder is classified as a deferred income c. The difference is allocated first to reduce proportionately (according to market value) non-current assets, and any negative remainder is classified as an one-off gain d. The difference is allocated first to reduce proportionately (according to market value) non-current, depreciable assets to zero, and any negative remainder is classified as a deferred income 6. With respect to goodwill, an impairment * a. Will be amortized over the remaining useful life b. Occurs when goodwill is positive and to perform annual impairment test c. Is a one-step process considering the entire firm d. Occurs when asset values are adjusted to fair value in a purchase 7. Ownership interests in a subsidiary entity other than the parent's interest are referred to as: * a. Outside interests b. Partial interests c. Minority interests d. Non-controlling interests 8. Rubber Sdn Bhd acquired the net assets and contingent liabilities of Yong Sdn Bhd for a purchase consideration of RM30,000. Yong Sdn Bhd's net assets and contingent liabilities were: Total assets RM42,000; Total liabilities RM5,000; Contingent liabilities RM6,000. Rubber Sdn Bhd will record: * a. Goodwill of RM1,000 b. Gain on bargain purchase of RM1,000 c. Goodwill of RM7,000 d. Gain on bargain purchase of RM30,000 9. What are joint operations? * a. the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. b. the parties that have joint control of the arrangement have rights to the net assets of the arrangement. c. the parties that have joint control of the arrangement have rights to the income and expenses only of the arrangement. d. commits to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both 10. The carrying amount of the investment at the date that the entity ceases to be a subsidiary shall be (1)______________ at the disposal date and accounted for as a financial (2)______________ * a. (1) measure at cost (2) financial liabilities b. (1) measure at cost (2) financial asset c. (1) remeasured to fair value (2) financial asset d. (1) zero (2) financial liabilities If you are human, leave this field blank. Submit
