Business Combinations Quiz Questions 2014 
ADVANCED FINANCIAL ACCOUNTING 260
BUSINESS COMBINATIONS
QUIZ QUESTIONS and SOLUTIONS
1. List two indicators which can assist in assessing which entity is the acquirer in a business combination. (2 Marks)
2. Define control. (1 Mark)
3. Name two types of business combination which are not covered by the provisions of AASB 3. (2 Marks)
4. On 1 April 2013, Lemon Ltd acquired all of the issued shares of Orange Ltd. At this date, the share capital of Orange Ltd consisted of 70 000 ordinary shares issued at $2.60 each. Under the terms of the acquisition Lemon Ltd is to give each shareholder of Orange Ltd for each five (5) Orange Ltd shares held two (2) Lemon Ltd shares and $1.50 cash. The fair value of a Lemon Ltd share is $3.35. It will cost Lemon Ltd $ 750 to issue the new shares.
Required Calculate the cost of the business combination, show all workings. (2 Marks)
5. How are directly attributable acquisition related costs accounted for? Why? (1 Mark)
6. In accounting for a business combination assets and liabilities acquired and assets and equity given up are measured at fair value on acquisition date. Does this mean that goodwill is also measured at fair value on that date? (1 Mark)
7. On 1 April 2013, Lemon Ltd acquired all of the issued shares of Orange Ltd. At this date, the share capital of Orange Ltd consisted of 70 000 ordinary shares issued at $2.60 each. Under the terms of the acquisition Lemon Ltd is to give each shareholder of Orange Ltd for each five (5) Orange Ltd shares held two (2) Lemon Ltd shares and $1.50 cash . The fair value of a Lemon Ltd share is $3.35. It will cost Lemon Ltd $ 750 to issue the new shares.
Required Prepare the journal entries to record the acquisition. (2 Marks)
8. Fred Walker the accountant for Tamarind Ltd is attempting to record the company’s recent acquisition of PawPaw Ltd. However, he is unable to determine if the acquisition date is 1 November 2013 or 14 November 2013. The managing
BUSINESS COMBINATIONS
QUIZ QUESTIONS and SOLUTIONS
1. List two indicators which can assist in assessing which entity is the acquirer in a business combination. (2 Marks)
2. Define control. (1 Mark)
3. Name two types of business combination which are not covered by the provisions of AASB 3. (2 Marks)
4. On 1 April 2013, Lemon Ltd acquired all of the issued shares of Orange Ltd. At this date, the share capital of Orange Ltd consisted of 70 000 ordinary shares issued at $2.60 each. Under the terms of the acquisition Lemon Ltd is to give each shareholder of Orange Ltd for each five (5) Orange Ltd shares held two (2) Lemon Ltd shares and $1.50 cash. The fair value of a Lemon Ltd share is $3.35. It will cost Lemon Ltd $ 750 to issue the new shares.
Required Calculate the cost of the business combination, show all workings. (2 Marks)
5. How are directly attributable acquisition related costs accounted for? Why? (1 Mark)
6. In accounting for a business combination assets and liabilities acquired and assets and equity given up are measured at fair value on acquisition date. Does this mean that goodwill is also measured at fair value on that date? (1 Mark)
7. On 1 April 2013, Lemon Ltd acquired all of the issued shares of Orange Ltd. At this date, the share capital of Orange Ltd consisted of 70 000 ordinary shares issued at $2.60 each. Under the terms of the acquisition Lemon Ltd is to give each shareholder of Orange Ltd for each five (5) Orange Ltd shares held two (2) Lemon Ltd shares and $1.50 cash . The fair value of a Lemon Ltd share is $3.35. It will cost Lemon Ltd $ 750 to issue the new shares.
Required Prepare the journal entries to record the acquisition. (2 Marks)
8. Fred Walker the accountant for Tamarind Ltd is attempting to record the company’s recent acquisition of PawPaw Ltd. However, he is unable to determine if the acquisition date is 1 November 2013 or 14 November 2013. The managing