ANSWER LETTERS ABCD On January 1, 2016, P Company purchased 90% of S Company for P620,000. At thetime of the investment, the book values of all S Company's assets and liabilities were equalto their fair values except for plant and equipment, land, and notes payable which were fair-valued at P280,000, P350,000, and P105,000, respectively. S Company's balance sheet onJanuary 1, 2016 was as follows:AssetsCashAccounts receivableInventoryFinancial assetsPlant and equipment (net)LandTotalLiabilities and equityAccounts payableNotes payableCapital stockRetained earningsTotalP 50,00025,000250,00075,000250,000300,000P950,000P 75,000125,000250,000500,000P950,000The non-controlling interest is to be measured at proportionate fair value of theacquiree's net assets.Required:a. Prepare the entry in the books of P Company to record the stock acquisition onJanuary 1, 2016.b. Compute the goodwill or gain on the bargain purchase.c. Prepare a schedule to determine the fair value and book value differential andallocation of differential.d. Prepare a working paper elimination entry for P Company as of January 1, 2016.

Purchase consideration - value of shareholding = Goodwill/(Gain on bargain purchase)

a. Prepare the entry in the books of P Company to record the stock acquisition on January 1, 2016. b. Compute the goodwill or gain on the bargain purchase. c. Prepare a schedule to determine the fair value and book value differential and allocation of differential. d. Prepare a working paper elimination entry for P Company as of January 1, 2016.