CIMA Financial Reporting F1 Question # 49 Topic 5 Discussion

CIMA Financial Reporting F1 Question # 49 Topic 5 Discussion

F1 Exam Topic 5 Question 49 Discussion:
Question #: 49
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?


A.

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


B.

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


C.

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


D.

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


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