Assuming the use of full goodwill approach, compute for the goodwill.
Transcribed Image Text:Parent Company acquired 18,000 shares of S Company's ordinary share on January 1, 2021, for payment of
P3,000,000 when S Company's stockholders' equity section appeared as follows:
Ordinary Share, P100 par, 25,000 shares issued
Share Premium
Retained Earnings
Total Stockholders' Equity
P2,500,000
700,000
800,000
200,000
Assets and liabilities of S Company has book values approximately equal to their fair values except for its inventory
with a book value of P100,000 and a fair value of P130,000 and land with a book value of P400,000 and a fair value
of P420,000. Assuming the use of full-goodwill approach, compute for the goodwill.
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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