IFRS for SMEs) IFRS for SMEs Business Combinations and Goodwill 1

Question 1

Under IFRS for SMEs, how must all business combinations be accounted for?

Accepted Answer

Using the purchase (acquisition) method

Answer

IFRS for SMEs Section 19 requires all business combinations to be accounted for using the purchase (acquisition) method without exception.

Question 2

Under IFRS for SMEs, when the useful life of goodwill cannot be estimated reliably, it is presumed to be amortized over a maximum of:

Accepted Answer

10 years

Answer

IFRS for SMEs Section 19.23 presumes goodwill has a useful life of 10 years when a reliable estimate cannot be made.

Question 3

On the acquisition date in a business combination, the acquirer measures identifiable assets acquired and liabilities assumed at:

Accepted Answer

Fair value

Answer

Under IFRS for SMEs Section 19, identifiable assets and liabilities are measured at their fair values at the acquisition date.

Question 4

Under IFRS for SMEs, if the cost of a business combination is less than the fair value of identifiable net assets acquired (negative goodwill), the acquirer should:

Accepted Answer

Recognize the excess as a gain in profit or loss immediately

Answer

Under IFRS for SMEs Section 19, any excess of fair value of net identifiable assets over cost is recognized immediately as a gain in profit or loss.

Question 5

Under IFRS for SMEs, goodwill is tested for impairment:

Accepted Answer

Only when impairment indicators exist

Answer

IFRS for SMEs uses a trigger-based approach, requiring impairment testing of goodwill only when indicators of impairment are present.

IFRS for SMEs (IFRS for Small and Medium-sized Entities (SMEs)) Practice Test

IFRS for SMEs (IFRS for Small and Medium-sized Entities (SMEs)) Practice Test

IFRS for SMEs) IFRS for SMEs Business Combinations and Goodwill 1