Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AFAR > Business Combination > Flashcards

Business Combination Flashcards

1
Q

Other Term for BUSCOM

A

True mergers or merger of equals

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Meaning of Business in BUSCOM

A
  • Integrated set of activities and assets… generating income
  • kahit walang output, business pa rin
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Scope of PFRS 3

A

joint arrangement - X
pooling of interest - X
not a business - X
mutual entities - ✓
contract alone (stapling) - ✓

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Classification of Business Combination

Horizontal vs Vertical vs Conglomerate

A

Horizontal - same industry (competitor)
Vertical - different level (supplier/buyer)
Conglomerate - unrelated industries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Classification of Business Combination

Acquisition of Net Assets (Merger and Consolidation)
ABM and C

A
  • always 100% (No NCI)
  • A + B = A or B (Merger)
  • A + B = C (Consolidation)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Classification of Business Combination

Acquisition of Stocks
Will the companies be dissolved?

A
  • may be 100% (no NCI) or less than 100% (with NCI)
  • companies involved will not be dissolved
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Control

ALL criteras must be met (PERA)

A
  • Power over investee
  • Exposure / Rights - to returns
  • Ability - to use power over investee
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Preferred Stock vs Common Stock

Percentage in Common Stok

A

Preferred
- no control regardless of % because doesn’t have voting rights

Common
- If 19% and below - FV
- If 20% to 50% - significant influence
- If 51% and above - control

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Classification of Business Combination

As to Accounting Methods

A

Pooling of Interest - under common control
Purchase Method - PFRS for SMEs
Acquisition Method - Full PFRS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

4 Steps in Acquisition Method

A
  1. Acquirer
  2. Acquisition Date (when control is obtained)
  3. FVINA and NCI (FV @ acquisition date)
  4. Goodwill / GBP
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Exceptions in Recognition and Measurement of FVINA

A
  • contingent liability (even if not probable)
  • indemnification assets (need AFDA)
  • reacquired rights (intangible asset = amortized)
  • leases (acquiree is lessee)
  • employee benefits and share-based payment
  • NCAFS
  • income taxes and insurance contracts
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Issues in Step 3

Intangible Asset (R&D, Customer List, Employee Skills, Goodwill in Books)

A

R&D
- regardless if R or D, if in-process = FAIR VALUE
- subsequently = PAS 38

Customer List, Brand, Mastheads
- allowed = FAIR VALUE

Employee Skills, Future Contracts
- not allowed

Goodwill in Books of Acquiree
- not part of FVINA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Issues in Step 3

Provisional Fair Values (remeasurement period)

A

Within Period (1 year from acquisition date)
- charged to goowill / GBP

Beyond Period
- charged to P/L

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Consideration Transferred

what value to use?

A

fair value (not book)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Contingent Consideration

CC is equity (Date of Acquistion vs Subsequent, Happen vs Not Happen)

A

Date of Acquisition
- credit SP-CC

Subsequent
- NOT remeasured

Event Happen
- close SP-CC (balancing figure is SP then RE)

Event didn’t Happen
- close SP-CC (move to Share Premium)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Contingent Consideration

CC is cash (Date of Acquistion vs Subsequent, Happen vs Not Happen)

A

Date of Acquisition
- credit EL-CC

Subsequent
- due to facts @ date of acquisition
- adjust EL-CC + adjust goodwill/GBP
- due to facts after
- adjust EL-CC + remeasurement G/L

Event Happen
- close EL-CC (balancing figure is P/L)

Event didn’t Happen
- close SP-CC (partnered with P/L)

17
Q

FV of Previously Held Interest

other term
FV vs Book Value

A

BC achieved in stages

FV vs Book Value (Gain or Loss on Remeasurement)
- if FVPL = P/L
- if FVOCI = OCI (UG/UL to Retained Earnings)

18
Q

NCI

what method is it present?
two methods

A
  • present only in acquisition of stocks
  • FV and Proportionate Method
  • FV = CT/Interest x NCI % (with NCI in the goodwill)
  • Proportionate = FVINA x NCI%
19
Q

Treatment for Costs

DACs, IDACs, Listing Fee

A

expensed

20
Q

Treatment for Costs

Debt / Bond Issue Cost

A

deducted to debt

21
Q

Treatment for Costs

Stock Issuance Cost

A
  1. SP from issuance
  2. SP from previous issuance
  3. Retained Earnings
22
Q

Treatment for Goodwill

A

subject to impairment

23
Q

What to do with GBP?

A
  1. Reassess net assets
  2. Recognize GBP
24
Q

Appearance of Goodwill/GBP in FS

Acquisition of Net Assets vs Acquisition of Stocks

A

Acquisition of Net Assets
- appear immediately in FS

Acquisition of Stocks
- only in CONSOLIDATED FS

25
Q

PFRS vs SME

A

Goodwill - not amortized | amortized
DACs - expenses | capitalized
Method for NCI - FV and Prop.| Prop. only

26
Q

Restructuring Provision

A

not part of business combination

AFAR (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions