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QUIZ PFRS 3 Business Combinations
Accounting (Imus National High School)
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PFRS 3 Business Combinations
QUIZ:
1. The “excess of the acquirer’s interest in the net fair value of acquiree’s identifiable
assets, liabilities, and contingent liabilities over cost” (formerly known as negative
goodwill) should be
a. Amortized over the life of the assets acquired.
b. Reassessed as to the accuracy of its measurement and then recognized
immediately in profit or loss.
c. Reassessed as to the accuracy of its measurement and then recognized in
retained earnings.
d. Carried as a capital reserve indefinitely.
(Adapted)
2. The acquisition date is
a. the date on which the acquirer obtains control of the acquiree.
b. the opening date.
c. the date the acquirer transfers to the acquiree the consideration in a business
combination.
d. any of these
3. On January 1, 20x1, ABC Co. acquired 60% interest in XYZ, Inc. for ₱2,000,000
cash. ABC Co. incurred transaction costs of ₱100,000 in the business combination.
ABC Co. elected to measure NCI at the NCI’s proportionate share in XYZ, Inc.’s
identifiable net assets. The fair values of XYZ’s identifiable assets and liabilities at
the acquisition date were ₱6,000,000 and ₱3,500,000, respectively. How much is
the goodwill (gain on a bargain purchase)?
a. 500,000
b. 478,000
c. (500,000)
d. (478,000)
“In some parts of the world, students are going to school every
day. It's their normal life. But in other part of the world, we are
starving for education... it's like a precious gift. It's like a
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- END –
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SOLUTION:
3. A {2,000,000 + [(6,000,000 – 3,500,000) x 40%]} – (6,000,000 – 3,500,00) =
500,000
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