CSFP (Theory) Flashcards

1
Q

First component of goodwill calculation?

A

Consideration transferred

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

What does consideration transferred refer to?

A

Total assets given, total liabilities and equity insutrments issued by acquirer.

Total costs of acquiring a business

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

What is deferred consideration?

A

Consideration that is paid in future is discounted to PV to determine FV

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

How is contingent consideration measured?

A

Measured at fair value at acquisition date

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

A gain on bargain purchase? (Meaning)

A

When a business acquired for less than FV of its net assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Where is gain on bargain purchase recognised?

A

Typically recognised in income statement as income. It is a positive economic benefit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What fair value must be established?

A

FV of non-controlling interest and net assets acquired

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Ways to calcualate NCI

A

FV (how much it costs for acquirer to acquire remaining shares)

Proportionate share of FV of net assets

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

FV (how much it costs for acquirer to acquire remaining shares)? What is done

A

NCI must be allocated any subsequent impairment losses

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

Proportionate share of FV of net assets? (Identifiable net assets mean)

A

No NCI interest in goodwill is recognised

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is an example of consideration?

A

A payment of $10 million in cash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Calculate goodwill?

A

Consideration + NCI at acquisition - net assets

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

What are intracompany balances?

A

Transactions between entities that are apart of the same group. These are eliminated to avoid double counting

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

What is cash in transit?

A

Cash movements from one location to another

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

What is done when a subsidiary is acquired midway through the year?

A

Distinguish between pre-acquisition and post-acquisition profits

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

What is done for pre-acquisition profits?

A

Included in retained earnings

17
Q

What is done for post-acquisition profits?

A

Included in group profit for the year

18
Q

Assumption for profits?

A

Accrue evenly

19
Q

Example of other components of equity?

A

Revaluation surplus

20
Q

Pre-acquisiton of other components of equity?

A

Included in goodwill calculation

21
Q

Post-acquisition of other components of equity when there’s movement between acquisition date and reporting date?

A

Show parent’s other components of equity + share of movement on subsidiary’s other components of equity

22
Q

What should current account receivable equal?

A

Current account payable

23
Q

Cash in transit entry?

A

Increase cash
Decrease receivables

24
Q

Goods in transit entry?

A

Increase inventories
Increase payables

25
Q

Eliminate intragroup receivables and payables?

A

Decrease receivable
Decrease payable

26
Q

Sold to a third party?

A

Profit realised

27
Q

Kept in inventory?

A

Proift unrealised

28
Q

Post-acquisition figure from net assets?

A

Used in NCI % of subsidiary’s post-acquisition

29
Q

Deferred cash consideration?

A

Deferred cash * appropriate discount rate