assets of XYZ Company and also incurred 12,000 direct acquisition costs. The recorded assets and liabilities of XYZ are: Cash, P74,000; Inventory, P215,000; Land, P200,000; Building (net), P208,000 and liabilities of P220,000. At the same date XYZ's inventories had a fair value of P184,000, the land, P271,500 and the building (net), P187,500.

assets of XYZ Company and also incurred 12,000 direct acquisition costs. The recorded assets and liabilities of XYZ are: Cash, P74,000; Inventory, P215,000; Land, P200,000; Building (net), P208,000 and liabilities of P220,000. At the same date XYZ's inventories had a fair value of P184,000, the land, P271,500 and the building (net), P187,500.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 11PB: On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received...

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Question

On July 1. 2015 ABC Company, an SME, paid P755,000 cash for the net assets of XYZ Company and also incurred 12,000 direct
acquisition costs. The recorded assets and liabilities of XYZ are: Cash, P74,000; Inventory, P215,000; Land, P200,000; Building (net),
P208,000 and liabilities of P220,000. At the same date XYZ's inventories had a fair value of P184,000, the land, P271,500 and the
building (net), P187,500.

- Determine the amount goodwill resulting from the business combination

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

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