22. On January 1, 2020 Parent Co. acquires 80% of the equity interests of Subsidiary Inc., a private entity, in exchange for cash of P150M, The identifiable assets are measured at 2 P250M and the liabilities assumed are measured at P50M. Parent engages an independent consultant, who determines that the fair value of the 20% non-controlling interest in Subsidiary is P 42M. Subsidiary's identifiable net assets of P 200M exceed the fair value of the consideration transferred plus the fair value of the non-controlling interest. Parent reviews the procedures it used to identify and measure the assets acquired and liabilities assumed and to measure the fair value of both the non-controlling interest in Subsidiary and the consideration transferred. After that review, Parent decides that the procedures and resulting measures were appropriate. Parent Co. measures the gain on bargain purchase at: a. P10,000,000 b. P2,000,000 c. P8,000,000 d. P-0- . Assuming Parent Co. chose to measure the non-controlling interest in Subsidiary on the basis of its proportionate interest in the identifiable net assets of the subsidiary, the gain on the purchase of the 80% interest would have been:

22. On January 1, 2020 Parent Co. acquires 80% of the equity interests of Subsidiary Inc., a private entity, in exchange for cash of P150M, The identifiable assets are measured at 2 P250M and the liabilities assumed are measured at P50M. Parent engages an independent consultant, who determines that the fair value of the 20% non-controlling interest in Subsidiary is P 42M. Subsidiary's identifiable net assets of P 200M exceed the fair value of the consideration transferred plus the fair value of the non-controlling interest. Parent reviews the procedures it used to identify and measure the assets acquired and liabilities assumed and to measure the fair value of both the non-controlling interest in Subsidiary and the consideration transferred. After that review, Parent decides that the procedures and resulting measures were appropriate. Parent Co. measures the gain on bargain purchase at: a. P10,000,000 b. P2,000,000 c. P8,000,000 d. P-0- . Assuming Parent Co. chose to measure the non-controlling interest in Subsidiary on the basis of its proportionate interest in the identifiable net assets of the subsidiary, the gain on the purchase of the 80% interest would have been:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On 1 July 2022, Dean Ltd acquired the remaining 80% of the issued shares of Lewis Ltd for shares in Dean Ltd with a fair value of $1 000 000. At that date, the financial statements of Lewis Ltd showed the following information. All the assets and liabilities of Lewis Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $50 000 below its fair value with a related accumulated depreciation of $80 000. Assume the equipment has not been revalued in the subsidiaries accounts. Also, Dean Ltd identified at acquisition date a contingent liability related to a lawsuit where Lewis Ltd was sued by a former supplier and attached a fair value of $40 000 to that liability. The previous held interest by Dean Ltd in Lewis Ltd (ie 20% of the issued shares) was recognised by in Dean Ltd.’s accounts at the fair value at acquisition date of $250 000. Dean Ltd incurred $15 000 in acquisition related costs including $10 000 in share issue costs.…
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