16. Allen leases

Barry Ltd and Allen Ltd enter into a finance lease agreement with the following terms:

lease term of 4 years; estimated economic life of the leased asset 5 years;

annual rental payments of $15,000 each payable in advance

residual value at the end of the lease term is not guaranteed by the lessee

interest rate implicit in the lease is 8%. The factor for a $1 annuity, at 8%, of 4 payments is 3.3121 and for 3 payments is 2.5771.

The journal entry recorded by the lessor when the first lease payment is received would be:

Select one:

a. DR Cash 15,000, CR Lease receivable 15,000

b. DR Lease receivable 15,000, CR Asset 15,000

c. DR Cash 15,000, CR Reimbursement revenue 15,000

d. DR Cash 15,000, CR Interest revenue 5,175, CR Lease receivable 9,825

[7:14 PM]

17. The acquisition date for a business combination is the date on which:

The acquisition date for a business combination is the date on which:

Select one:

a. the acquirer announces the acquisition to the acquiree.

b. the business combination is announced to the public.

c. a substantive agreement between the combining parties is reached.

d. the acquirer effectively obtains control of the acquiree.

[7:15 PM]

18. Under AASB 3, the method of accounting for a business combination is the:

Under AASB 3, the method of accounting for a business combination is the:

Select one:

a. market value method.

b. joint venture method.

c. acquisition method.

d. purchase method.

[7:15 PM]

19.Where the acquirer purchases assets and assumes liabilities of another entity...

Where the acquirer purchases assets and assumes liabilities of another entity it DOES NOT need to consider measurement of:

Select one:

a. fair values of identifiable net assets.

b. goodwill.

c. carrying amounts of identifiable net assets.

d. consideration transferred.

[7:16 PM]

20. If shares are issued as part of the consideration paid, transactions costs ...

If shares are issued as part of the consideration paid, transactions costs such as brokerage fees may be incurred. Under AASB 3/IFRS 3 Business Combinations, the appropriate accounting treatment for share issue costs in the records of the acquirer is a debit to:

Select one:

a. investments.

b. expenses.

c. cash.

d. share capital.

[7:16 PM]

21. The consideration transferred in a business combination is measured as the ...

The consideration transferred in a business combination is measured as the fair value of the:

Select one:

a. net assets acquired.

b. costs directly attributable to the combination.

c. consideration given plus directly attributable costs.

d. monetary assets, non-monetary assets, and/or equity instruments given up and/or liabilities undertaken.

[7:16 PM]

22. Goodwill is measured as the difference between the:

Goodwill is measured as the difference between the:

Select one:

a. present value of the consideration transferred, and the present value of the net assets acquired

b. fair value of the consideration transferred, and the fair value of the assets and liabilities acquired

c. cost of the net assets acquired, and the net present value of the consideration given up.

d. cost of the assets given up, and the cost of the net assets acquired.