28. Company A owns a 35% interest in Company B. The investment, with an original cost ofP50,000, is accounted for as an associate using the equity method. On 30 December 2020,the carrying value of the investment in Company B was P230,000 and its fair value wasP308,000. The fair value of Company B's identifiable net assets on that date was P800,000.On 31 December 2020, Company A purchased an additional 40% interest in Company Bfor P352,000, thereby obtaining control. Company A opted to measure NCI at fair valuewhich was determined to be P220,000.How much goodwill (gain) is recognized on the second purchased of interest?a. (P42,000)b. P80,000c. (P178,000)d. P2,000Maynard Corporation reports net assets of P300,000 at book value. These assets have anestimated market value of P350,000. Jim Corporation buys 80% ownership of Maynard forP300,000; there is a control premium of P10,000 included in the purchase price.Of the Goodwill reported in the consolidated balance sheet (as of date of acquisition), howmuch is attributable to the non-controlling interest?а. Р3,000b. P5,000с. Р2,500d. P4,500

Facts of the Question 28 : Share of investment of company A= 35% Original cost of investment…

28. Company A owns a 35% interest in Company B. The investment, with an original cost of P50,000, is accounted for as an associate using the equity method On 30 December 2020 the carrying value of the investment in Company B was P230,000 and its fair value was P308,000. The fair value of Company B's identifiable net assets on that date was P800,000. On 31 December 2020, Company A purchased an additional 40% interest in Company E for P352,000, thereby obtaining control. Company A opted to measure NCI at fair value which was detemined to be P220,000. How much goodwill (gain) is recognized on the second purchased of interest? a (P42,000) b. P80,000 c. (P178,000) d. P2,000

28. Company A owns a 35% interest in Company B. The investment, with an original cost of P50,000, is accounted for as an associate using the equity method On 30 December 2020 the carrying value of the investment in Company B was P230,000 and its fair value was P308,000. The fair value of Company B's identifiable net assets on that date was P800,000. On 31 December 2020, Company A purchased an additional 40% interest in Company E for P352,000, thereby obtaining control. Company A opted to measure NCI at fair value which was detemined to be P220,000. How much goodwill (gain) is recognized on the second purchased of interest? a (P42,000) b. P80,000 c. (P178,000) d. P2,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On 1 July 2020, Sky Ltd acquired 70% of the share capital (ex. div.) of Jim Ltd for $500,000. At that date, the relevant balances in the records of Jim Ltd were: Share capital General reserve Retained earnings Dividend payable S 434,000 35,000 126,000 14,000 At the date of acquisition all assets and liabilities of Jim Ltd were recorded in the accounting records at amounts equal to their fair values with the exception of the following assets: Carrying amount Fair value Land Machine 56,000 30,800 Land was sold on 1 May 2023 for $77,000. $ 67,200 49,000 The cost of the Machine was $58,800 and had a further 5-year life as at the date of acquisition. Jim Ltd had reported a Contingent liability at 1 July 2020 in relation to claims by customers for damaged goods. Sky Ltd placed a fair value of $12,600 on these claims at acquisition date. This claim was settled on 1 April 2023 for $7,000. Additional information: a) On 1 March 2023, Jim Ltd purchased inventory from Sky Ltd for $25,200,…
On 1 July 2019, Silver Ltd, a reporting entity, acquired all of the issued shares of Brumby Ltd. As part of the settlement, Silver Ltd agreed to pay $1,700,000 on 1 July 2019 and $1,284,000 payable on 1 July 2020. The appropriate discount rate was 7% per annum. Silver Ltd also issued 475,000 shares of Silver Ltd to the shareholders of Brumby Ltd. At acquisition date, the fair value of the ordinary shares of Silver Ltd were $2.50 and the fair value of the ordinary shares of Brumby Ltd were $3.00. Brumby Ltd's shareholders' equity on 1 July 2019 consisted of the following: Issued capital $1,900,000 Retained earnings $650,000 Total shareholders' equity $ 2,550,000 At 1 July 2019, all of Brumby Ltd's net assets were recorded at fair value, except the following items: Carrying Amount Fair Value Machinery $1,120,000 $1,400,000 Brumby Ltd purchased the plant for $1,500,000. On 1 July 2019, the plant had an estimated remaining useful life of 7 years with zero residual value. Brumby Ltd is…
Carnes Co. decided to use the partial equity method to account for its investment in Domino Corp. An unamortized trademark associated with the acquisition was $30,000, and Carnes decided to amortize the trademark over ten years. For 2021, Carnes' Equity in Subsidiary Earnings was $78,000. Required: What balance would have been in the Equity in Subsidiary Earnings account if Carnes had used the equity method?
Petro Ltd acquired 60% of Carlos Ltd’s 500,000 R1 equity shares on 1st January 2019 for a consideration of R5 cash per share. At the date of acquisition, net assets and liabilities in Carlos Ltd were valued at R1,600,000 and the fair value of the non-controlling interest was R800,000.Required:1. Determine the acquisition date.2. Calculate goodwill or gain on bargain purchase if any using Proportionate of Net Assets Method3. Calculate goodwill or gain on bargain purchase if any using Fair Value Method
Ee.104.
Glory Plc holds 10% investment in Adom Plc at GHC24,000 and accounts for it in line withIFRS 9. On 1 January 2018 Glory acquired a further 50% of Adom Plc’s ordinary shares at a cost ofGHC160,000. On 1 January 2018, the net assets of Adom Plc were assessed to have total value ofGHC 200,000, the NCI was fair valued at GHC100,000 and the 10% previously held was assessed tohave a fair value of GHC 26,000.Calculate the Goodwill arising from the acquisition of Adom PlcA GHC 86,000B GHC 66,000C GHC 100,000D GHC20,000
XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash 79 100 Plant and equipment fair value $282 500; carrying amount in the books of ABC Ltd $192 100 Land fair value $339 000; carrying amount in the books of ABC Ltd $226 000 There are also legal fees of $214 700 involved in acquiring Red-X Ltd. On 1 July 2021, Red-X Ltd’s statement of financial position shows total assets of $339 000 and liabilities of $339 000. The fair value of the assets is $904 000. Required: Has any goodwill been acquired, and, if so, how much? And discuss the potential for including associated legal fees into the cost of acquiring Red-X using appropriate accounting standards
On January 1, 2024, Morey, Incorporated, exchanged $180,575 for 25 percent of Amsterdam Corporation. Morey appropriately applied the equity method to this investment. At January 1, the book values of Amsterdam’s assets and liabilities approximated their fair values. On June 30, 2024, Morey paid $605,500 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam’s total fair value. At June 30, the carrying amounts of Amsterdam’s assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill. Amsterdam reports the following amounts at December 31, 2024 (credit balances shown in parentheses): Revenues $ (291,000) Expenses 186,000 Retained earnings, January 1 (237,300) Dividends declared, October 1 10,000 Common stock (500,000) Amsterdam’s revenue and expenses were distributed evenly throughout the year, and no…
Compute for the goodwill.
11. On December 1, 2021, ABC Company acquired all the assets and liabilities of XYZ Inc. issuing 100,000 shares. The fair value of XYZ's assets and liabilities at this date are presented below (see image) The financial year for ABC Company is January to December. The fair value of each ABC share at acquisition date is P1.90. At the acquisition date, the acquirer could only determine a provisional fair value for the Plant. On March 9, 2022, ABC received the final value from the independent appraisal, the fair value of the Plant at acquisition date is P131,000 with a 5 year remaining useful life from date of acquisition. Determine a) Fair value of the net assets acquired b) amount of goodwill or gain from acquisition
6. On December 31, 2019, Stefan company purchased for 30 per share all 300,000 of Elena company’s outstanding ordinary shares. On this date, the acquiree’s statement of financial position showed net assets of P7,500,000. Additionally, the fair value of the acquiree’s identifiable assets on this date was 600,000 in excess of carrying amount. In the statement of financial position, what amount should be reported as goodwill as a result ofthe acquisition?
On 1 July 2019, Frankie Ltd acquired 80% of the issued shares of Sinatra Ltd for $250,000. At that date, Sinatra Ltd's equity consisted of share capital of $200,000 and retained earnings of $300,000. At acquisition date, all identifiable net assets of Sinatra Ltd were recorded at amounts equal to fair value. At 1 July 2019, the fair value of the non-controlling interest was $50,000. Required: (a) Calculate goodwill using the partial goodwill method. (b) Explain the reason why an adjustment is required to the NCI share of profit, for a non-current asset revalued to fair value at acquisition date.