Assets Cash The statement of financial position of Humility Company as of 31, 2021 is as follows: Accounts receivable Inventories Property, plant and equipment P 175,000 250,000 725,000 950,000 P 2,100,000 Liabilities and Shareholders' Equity Current liabilities P Mortgage payable Ordinary share capital Share premium Accumulated profits 250,000 450,000 200,000 400,000 800,000 P 2,100,000 On January 14, 2022 the Faithful Inc. bought all of the outstanding shares of Humility Company for P1,800,000 cash. On the date of acquisition, the fair market value of Humility's inventories was P 675,000, while the fair value of Humility's property, plant equipment was P 1,100,000. The fair value of all other assets and liabilities of Humility were equal to their book values. Legal fees incurred amounted to P20,000. Contingent consideration with estimated fair value of P50,000 is also available on that date. Required 1. The amount of goodwill recorded in the books of Faithful Inc. 2. Assuming Faithful purchased 75% interest of Humility for P1,500,000 and NCI is measured using the proportionate method, how much is the goodwill on combination?

Assets Cash The statement of financial position of Humility Company as of 31, 2021 is as follows: Accounts receivable Inventories Property, plant and equipment P 175,000 250,000 725,000 950,000 P 2,100,000 Liabilities and Shareholders' Equity Current liabilities P Mortgage payable Ordinary share capital Share premium Accumulated profits 250,000 450,000 200,000 400,000 800,000 P 2,100,000 On January 14, 2022 the Faithful Inc. bought all of the outstanding shares of Humility Company for P1,800,000 cash. On the date of acquisition, the fair market value of Humility's inventories was P 675,000, while the fair value of Humility's property, plant equipment was P 1,100,000. The fair value of all other assets and liabilities of Humility were equal to their book values. Legal fees incurred amounted to P20,000. Contingent consideration with estimated fair value of P50,000 is also available on that date. Required 1. The amount of goodwill recorded in the books of Faithful Inc. 2. Assuming Faithful purchased 75% interest of Humility for P1,500,000 and NCI is measured using the proportionate method, how much is the goodwill on combination?

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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