CIMA Exam CIMAPRA19-F01-1 Topic 5 Question 105 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam

Question #: 105
Topic #: 5

An entity acquires 100% of the equity shares in another entity.

The consideration paid for the shares is less than the fair value of the net assets acquired.

Which of the following is the correct accounting treatment for the difference between the consideration paid and the fair value of the net assets acquired, in accordance with IFRS 3 Business Combinations?

ARecognise as a gain in the consolidated statement of profit or loss.

BRecognise as a deferred credit and release to consolidated profit or loss over its useful economic life.

CRecognise as a deduction from goodwill in the consolidated statement of financial position.

DRecognise as a gain in the statement of changes in equity.

Show Suggested Answer

Suggested Answer: A

by Vivan at Jan 13, 2025, 12:09 PM

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Shelton

6 days ago

I think the correct answer is C.

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Laine

10 days ago

Hmm, I'm not so sure. Option C seems more appropriate, as the difference should be deducted from goodwill.

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Patrick

11 days ago

I think option A is correct. It makes sense to recognize the difference as a gain in the consolidated statement of profit or loss.

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