1.

Discuss the Account for business combinations

a. Accomplished through share for share exchange In a business combination
accomplished through a mere exchange of equity interests between the acquirer
and the acquiree (or its former owners), the acquisition-date fair value of the
acquiree’s equity interests may be more reliably measurable than the acquisition-
date fair value of the acquirer’s equity interests. In such a case, the acquirer shall
determine the amount of goodwill by using the acquisition-date fair value of the
acquiree’s equity interests instead of the acquisition-date fair value of the equity
interests transferred.
b. Achieved in stages In a business combination achieved in stages, the acquirer
shall remeasure its previously held equity interest in the acquiree at its
acquisition-date fair value and recognize the resulting gain or loss, if any, in profit
or loss or other comprehensive income, as appropriate.
c. Achieved without transfer of consideration. In a business combination that
does not involve the transfer of consideration, the fair value of the acquirer's
interest in the acquiree (determined by using valuation techniques) should be
used in the measurement of goodwill.

2. Discuss the measurement period in relation to business combinations

The measurement period is a reasonable time period after the acquisition date
when the acquirer may adjust the provisional amounts recognized for a business
combination if the necessary information is not available by the end of the
reporting period in which the acquisition occurs.

3. Differentiate what is part of a business combination and what is part of a

separate transactions.
A transaction or other event in which an acquirer (an investor entity) gains control
of one or more firms is referred to as a business combination. A business
combination will typically occur when an entity buys a majority stake in another
operating entity that is unconnected to it. If a transaction is made by or on behalf
of the acquirer and is principally for the advantage of the acquirer or the merged
entity rather than the acquiree or its former owners, it is likely to be recognized
and recorded separately from a business combination.

4. Discuss or account for settlement of pre-existing relationship between an

acquirer and an acquiree.
The pre-existing relationship between the acquirer and the acquiree, such as
when the acquirer granted the acquiree permission to use its intellectual
property, must be taken into account independently from the business
combination. The majority of the time, this will result in the recognition of a gain
or loss for the amount of the consideration delivered to the vendor, thereby
representing a "settlement" of the prior relationship.

5. Discuss the methods of estimating goodwill.

One of the simplest methods of calculating goodwill for a small business is by
subtracting the fair market value of its net identifiable assets from the price paid
for the acquired business. Goodwill is an intangible asset that arises when a
business is acquired by another.

6. Discuss or account for reverse acquisitions.

A reverse acquisition occurs when an entity that issues securities (the legal parent
or the legal acquirer) is identified as the accounting acquiree, and accordingly, the
legal subsidiary (or the legal acquiree) is identified as the accounting acquirer.