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Questions Bank (1480128 total)

Which of the following statements regarding the acquisition method of accounting for business combinations is/are CORRECT?

(i) It is applied only when the acquirer purchases 100% of the share capital of the acquiree

(ii) It requires calculating goodwill

(iii) It is applied at every balance sheet date subsequent to the date of acquisition

(ii) only

(i) and (ii)

(i) and (iii)

(iii) only

(i) only

Entity X pays £80m for an 80% interest

in Entity Y. The fair value of Entity B's net assets is estimated to be £75m.

Using a valuation technique, the fair

value of the remaining 20% in Entity Y on the acquisition date is

determined to be £16m.

Using the proportionate share method, the value of NCI is £16m.

The fair value of NCI is £15m.

Using the fair value of NCI, goodwill is £21m.

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