When an entity adopts IFRS for the first time and restates previous business combinations (that is, because it does not elect the exemption to not restate such business combinations), IFRS 3 is applied retrospectively to which step in the acquisition method?

A.Recognizing and measuring the identifiable assets acquired, liabilities assumed and any non-controlling interest on the acquisition date

B.Determining the classification of the business combination (i.e., whether it represents an acquisition or reverse acquisition)

C.IFRS 3 is applied retrospectively to all of the acquisition method steps.

D. Recognizing and measuring goodwill or a bargain purchase gain

Manufacturer purchases raw materials from Supplier under a five-year noncancelable supply contract at fixed rates. At the end of year 3 of the contract, Manufacturer acquires Supplier's entire business (i.e., inputs, processes, workforce). At the time of acquisition, the fixed rates paid by Manufacturer under the supply contract are higher than the rates at which Manufacturer could purchase similar raw materials from another supplier so wishes to effectively settle this relationship. How will Manufacturer disclose this transaction in connection with the business combination?

A. The transaction is recognized as part of the business combination; Manufacturer will disclose a description of the transaction, the fair value of the assumed liability that is recognized in the business combination (i.e., for the unfavorable off-market component of the contract) and the method used to determine the amount at which the pre-existing relationship was effectively settled.

B. The transaction is recognized separately from the business combination; Manufacturer will disclose a description of the transaction, the effective settlement amount, the line item in the income statement in which the settlement loss is recognized and the method used to determine the amount at which the pre-existing relationship was effectively settled.

C. The transaction is recognized separately from the business combination; Manufacturer will disclose a description of the transaction, the amount of unrealized settlement loss recognized in other comprehensive income, and the method used to determine the amount at which the pre-existing relationship was effectively settled.

D. The transaction is recognized as part of the business combination; Manufacturer will disclose a description of the transaction, the effective settlement amount that is included in the consideration transferred to acquire the business and the method used to determine the amount at which the pre-existing relationship was effectively settled.

Which of the following statements is not correct regarding the measurement period?

A. If the initial accounting for a business combination has been completed by the end of the reporting period, the acquirer is allowed to report provisional amounts and retrospectively adjust those amounts if new information becomes available during the measurement period.

B. The acquirer adjusts provisional amounts recognized if new information becomes available during the measurement period that would have affected the measurement of amounts recognized as of the acquisition date.

C. The measurement period cannot exceed one year from the business combination date.

D. The measurement period ends as soon as the acquirer obtains the information it was seeking about facts and circumstances that existed as of the business combination date.