ABC Company acquired all of JKL Corporation's assets and liabilities on October 1, 2015. JKL reported assets with a book value of P998,400 and liabilities of P569,600. • ABC noted that JKL included the amount of P64,000 pertaining to the cost of obsolete merchandise in its recorded assets. The merchandise are no longer saleable. • ABC also determined that an old delivery van previously used by JKL had a fair value of P192,000 but is fully depreciated in its books. Except for machinery and equipment, ABC determined the fair value of all other assets and liabilities reported by JKL approximated their recorded values. • In recording the transfer of assets and liabilities in its books, ABC recorded gain on acquisition of P148,800. ABC paid P327,200 to acquire JKL's assets and liabilities. (1) If the book value of JKL's machinery and equipment was P345,600, what was their fair value? (2) Using the same information above, but with the following changes in assumption: ABC recorded goodwill of P402,000 and ABC paid P1,037,000 to acquire JKL's assets and liabilities. If the book value of JKL's machinery and equipment was P516,500, what was their fair value? A. P264,800; P438,300 B. P426,400; P438,300 C. P264,800; P594,700 D. P426,400; P594,700
ABC Company acquired all of JKL Corporation's assets and liabilities on October 1, 2015. JKL reported assets with a book value of P998,400 and liabilities of P569,600. • ABC noted that JKL included the amount of P64,000 pertaining to the cost of obsolete merchandise in its recorded assets. The merchandise are no longer saleable. • ABC also determined that an old delivery van previously used by JKL had a fair value of P192,000 but is fully depreciated in its books. Except for machinery and equipment, ABC determined the fair value of all other assets and liabilities reported by JKL approximated their recorded values. • In recording the transfer of assets and liabilities in its books, ABC recorded gain on acquisition of P148,800. ABC paid P327,200 to acquire JKL's assets and liabilities. (1) If the book value of JKL's machinery and equipment was P345,600, what was their fair value? (2) Using the same information above, but with the following changes in assumption: ABC recorded goodwill of P402,000 and ABC paid P1,037,000 to acquire JKL's assets and liabilities. If the book value of JKL's machinery and equipment was P516,500, what was their fair value? A. P264,800; P438,300 B. P426,400; P438,300 C. P264,800; P594,700 D. P426,400; P594,700
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:ABC Company acquired all of JKL Corporation's assets and liabilities on October 1, 2015.
JKL reported assets with a book value of P998,400 and liabilities of P569,600.
• ABC noted that JKL included the amount of P64,000 pertaining to the cost of obsolete
merchandise in its recorded assets. The merchandise are no longer saleable.
ABC also determined that an old delivery van previously used by JKL had a fair value of
P192,000 but is fully depreciated in its books.
Except for machinery and equipment, ABC determined the fair value of all other assets and
liabilities reported by JKL approximated their recorded values.
In recording the transfer of assets and liabilities in its books, ABC recorded gain on
acquisition of P148,800. ABC paid P327,200 to acquire JKL's assets and liabilities.
(1) If the book value of JKL's machinery and equipment was P345,600, what was their fair value?
(2) Using the same information above, but with the following changes in assumption: ABC
recorded goodwill of P402,000 and ABC paid P1,037,000 to acquire JKL's assets and liabilities.
If the book value of JKL's machinery and equipment was P516,500, what was their fair value?
А. Р264,800;B Р438,300
В. Р426,400; Р438,300
C. P264,800; P594,700
D. P426,400; P594,700
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