A Home office ships inventory to its branch at an amount above cost.

By year-end, 75% of the inventory

shipped to the branch has been resold to outsiders, how is the realized intercompany profit
determined?

[A] billed price x 75%

[B] (Billed price less cost) x 75%

[C] Billed price x 25%

[D] (Billed price less cost) x 25%

All business combinations within the scope the standard must be accounted for using the acquisition
method which consists of the following, except:

[A] identifying the acquirer

[B] determining the acquisition date and consideration transferred

[C] recognizing and measuring the identifiable assets acquired, the liabilities assumed and any non-
controlling interest in the acquiree

[D] recognizing goodwill or in case of a bargain purchase, a gain using the pooling of interest method

Statement I: Acquisition-related costs are costs the acquirer incurs to effect a business combination;
Statement II: According to PFRS 3 consistent with other measurements in transferred consideration, the
acquirer shall recognize the acquisition-date fair values of contingent consideration as part of the
consideration transferred

[A] Statement I is true, Statement II is false

[B] Statement I is false, Statement II is true

[C] Both statements are true

[D] Both statements are false.

Statement I: The acquisition date is defined as the date on which the acquirer obtains control of the
acquiree; Statement II: The acquisition date is the date the acquirer legally transfers the consideration,
acquires the assets and assumes liabilities of the acquiree.

[A] Statement I is true, Statement II is false

[B] Statement I is false, Statement II is true

[C] Both statements are true

[D] Both statements are false.

Which of the following is the best theoretical justification for consolidated financial statements?

[A] In form the companies are one entity, in substance they are separate

[B] In form the companies are separate, in substance they are one entity
[C] In form and substance, the companies are one entity

[D] In form and substance, the companies are separate.

After reassessing the measurement of the acquiree’s identifiable assets, liabilities and contingent
liabilities and the measurement of the cost of the business combination, any gain from bargain purchase
is

[A] included immediately in profit and loss

[B] deferred and subsequently amortized over a reasonable period

[C] deferred and not amortized

[D] credited directly to Accumulated Profits