1.

Which of the following items that are recorded at the acquirees books at
acquisition date cannot be recorded at the acquirers book?
A. Contingent Liability
B. Goodwill
C. Premium on Bonds Payable
D. Marketable Securities
2. Which of the following statements is false?
I. In a business combination in contract alone, the acquirer shall remeasure
its previously held equity interest in the acquiree at its acquisition-date fair
value and recognize the resulting gain or loss, if any, in profit or loss
II. In a business combination in contract alone, the acquirer shall attribute to
the owners of the acquiree the amount of the acquirees net assets
recognized in accordance with this IFRS.
A. I only.
B. II only
C. Both I and II.
D. Neither I nor II.
3. Which of the following may not be given as a consideration by an acquirer?
A. Bond
B. Preferred Stock
C. Convertible Preferred Stock
D. None of the above
4. In business combination, the measurement period allowed is:
A. One year from the liquidation date.
B. One year from the end of the reporting period.
C. One year from contract date.
D. One year from acquisition date.
5. An entity purchased 100% of the net assets of another entity. On the
acquirers books, which of the following accounts is NOT usually debited?
A. Common Stock
B. Share Premium
C. Retained Earnings
D. Goodwill
6. After initial recognition, the acquirer shall measure goodwill acquired in a
business combination at:
A. Fair value less any accumulated impairment losses
B. Cost less any accumulated amortization and accumulated impairment
losses
C. Cost less any accumulated impairment losses
D. Fair value less any accumulated amortization and accumulated impairment
losses
7. Which of the following best describes the recoverable amount of an asset?
A. Higher of value in use and fair value less cost to sell.
B. Higher of value in use and fair value.
C. Higher of carrying amount and fair value.
D. Higher of carrying amount and fair value less cost to sell.
8. Which of the following statements is true?

I. If the contingent consideration is classified as an equity instrument, the

original amount is remeasured.
II. The requirements of IAS 37 Provisions, Contingent Liabilities and
Contingent Assets do not apply to the recognition of contingent liabilities
arising in a business combination.
A. I only.
B. II only.
C. Both I and II.
D. Neither I nor II.
9. Which of the following is a required disclosure for an acquirer?
A. Name and description of the acquiree.
B. Percentage of non-voting shares acquired.
C. Name of the new company in the case of consolidation.
D. Amount of internally generated goodwill.
10.Which of the following statements is true?
I. IFRS 3 is not applicable to businesses under common control combinations.
II. All business combinations should be accounted for using acquisition
method.
A. I only
B. II only
C. Both I and II.
D. Neither I nor II.
11.Which of the following is included as part of the consideration given?
A. Indirect cost and acquisition related expenses
B. All direct expenses relating to the acquisition
C. Contingent consideration
D. Cost related to the issuance of stocks.
12.An entity debited Retained Earnings to record registration fees paid to issue
equity securities. What is the effect of this to the Stockholders Equity and
Legal Capital respectively?
A. Understated, Understated
B. Understated, No effect
C. No effect, Understated
D. No effect, No effect
13.An entity purchased 100% of the net assets of another entity. On the
acquirees books, which of the following accounts is NOT usually debited?
A. Common Stock
B. Share Premium
C. Retained Earnings
D. Goodwill
14.
An acquiree initially recorded and subsequently measured its PPE using
the cost method. The fair value of the acquirees building was assessed to
have a fair value which is higher than the amount recorded in its book.
Should this building be assessed in its fair value in determining the goodwill
of the acquirer?
A. Yes, because this increase is a holding gain on the part of the acquiree.
B. No, because the acquiree elected the cost method of measuring PPE.

C. Yes, because all the assets and liabilities should be measured at

fair value.
D. No, because this violates the principle of conservatism.
15.On December 31, 2015, PPP Company acquired the net assets of PB Corp. by
paying cash. On that day, net assets of PPP Company amounted to P650,000
and PB Companys net assets totaled P750,000. Total consideration given by
FHM amounts to P700,000. One year after the acquisition, the acquired
assets gross selling price is at P690,000, net selling price is P675,000 and
value in use is at P650,000. On December 31, 2016, how much is the
impairment of goodwill?
A. 0
B. 25,000
C. 60,000
D. 75,000
16. When does an acquiree debit its Share Premium account?
A. When it pays cost of issuance of shares.
B. When it pays direct or indirect acquisition costs.
C. When it liquidates.
D. None of the choices.
17.
X Corp. acquired 50% of the voting stocks of Y Corp. How should X
Corp account for this transaction?
A. As a related party transaction
B. As an investment in associate.
C. As an investment in subsidiary.
D. As an acquisition of assets.
18.Which of statement/s best describe the pooling of interest method?
A. IFRS 3 requires the use of this method in business combinations.
B. Assets and liabilities of acquiree are recorded at their book
values.
C. Goodwill and gain on acquisition are recorded under this method.
D. None of the choices.
19.In accounting for business combinations, which of the following intangibles
should not be recognized?
A. Trademarks
B. Lease agreements
C. Employee quality
D. Patents
20.The general guideline for assigning amounts to the inventories acquired
provide for:
A. Raw materials to be valued at original cost.
B. Work in process to be valued at the estimated selling price of finished
goods less both costs to complete and costs of disposal.
C. Finished goods to be valued at replacement cost.
D. Finished goods to be valued at estimated selling price less both
cost of disposal and a reasonable profit allowance.