26. On January 1, 2020, the Acts Co. acquired 100% of the Titus Co. when the fair value of Titus net assets was P4,000,000 and their carrying amount was P3,500,000 The consideration transferred comprised P4,400,000 in cash transferred at the acquisition date, Titus net assets was P4,000,000 and their carrying amount was P3,500,000 T consideration transferred comprised P4,400,000 in cash transferred at the acquisition de plus another P200,000 in cash to be transferred 10 months after (November 1, 2020) acquisition date if a specified profit target was met by Titus. At the acquisition date, the was only a low probability, around 40%, of the profit target being met. On November 1, 2020, additional P200,000 was paid by Acts to Titus after the latter me the specified profit target. How much is the goodwill to be reported on December 31, 2020? a P480,000 b. P600,000 c. P980,000 d. P400,000 , the entry in the books of Acts on November 1, 2020 will include: a. Debit to loss account, P120,000. b. Credit to goodwill, P120,000. c. Debit to goodwill, P120,000. d. Credit to liability account, P120,000. e. Debit to loss account, P80,000.
26. On January 1, 2020, the Acts Co. acquired 100% of the Titus Co. when the fair value of Titus net assets was P4,000,000 and their carrying amount was P3,500,000 The consideration transferred comprised P4,400,000 in cash transferred at the acquisition date, Titus net assets was P4,000,000 and their carrying amount was P3,500,000 T consideration transferred comprised P4,400,000 in cash transferred at the acquisition de plus another P200,000 in cash to be transferred 10 months after (November 1, 2020) acquisition date if a specified profit target was met by Titus. At the acquisition date, the was only a low probability, around 40%, of the profit target being met. On November 1, 2020, additional P200,000 was paid by Acts to Titus after the latter me the specified profit target. How much is the goodwill to be reported on December 31, 2020? a P480,000 b. P600,000 c. P980,000 d. P400,000 , the entry in the books of Acts on November 1, 2020 will include: a. Debit to loss account, P120,000. b. Credit to goodwill, P120,000. c. Debit to goodwill, P120,000. d. Credit to liability account, P120,000. e. Debit to loss account, P80,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:26. On January 1, 2020, the Acts Co. acquired 100% of the Titus Co. when the fair value of
Titus net assets was P4,000,000 and their carrying amount was P3,500,000 The
acquisition date if a specified profit target was met by Titus. At the acquisition date, there
consideration transferred comprised P4,400,000 in cash transferred at the acquisition date,
CHAPTER 1: BUSINESS COMBINATION
Page 52
26. On January 1, 2020, the Acts Co. acquired 100% of the Titus Co. when the fair value
Titus net assets was P4,000,000 and their carrying amount was P3,500,000 Tor
consideration transferred comprised P4,400,000 in cash transferred at the acquisition da
plus another P200,000 in cash to be transferred 10 months after (November 1, 2020)
acquisition date if a specified profit target was met by Titus. At the acquisition date, the
was only a low probability, around 40%, of the profit target being met.
On November 1, 2020, additional P200,000 was paid by Acts to Titus after the latter mes
the specified profit target.
How much is the goodwill to be reported on December 31, 2020?
a P480,000
b. P600,000
c. P980,000
d. P400,000
the entry in the books of Acts on November 1, 2020 will include:
Debit to loss account, P120,000.
b. Credit to goodwill, P120,000.
Debit to goodwill, P120,000.
d. Credit to liability account, Pl120,000.
Debit to loss account, P80,000.
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