Brewer Company acquired all of the outstanding ordinary shares of an acquiree paying P12,000,000 cash. The carrying amount and fair value of the assets and liabilities of the acquire were: Carrying amount Fair value Accounts receivable. Inventory 1,800,000 2,000,000 Property, plant and equipment 2,700,000 5,000,000 Accounts payable 10,000,000 13,000,000 Bonds payable 3,000,000 3,000,000 4,500,000 3,500,000 What amount should be recognized as gain on bargain purchase? a. 2,500,000 b. 8.000

Brewer Company acquired all of the outstanding ordinary shares of an acquiree paying P12,000,000 cash. The carrying amount and fair value of the assets and liabilities of the acquire were: Carrying amount Fair value Accounts receivable. Inventory 1,800,000 2,000,000 Property, plant and equipment 2,700,000 5,000,000 Accounts payable 10,000,000 13,000,000 Bonds payable 3,000,000 3,000,000 4,500,000 3,500,000 What amount should be recognized as gain on bargain purchase? a. 2,500,000 b. 8.000

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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S Company had the following balances at the time it was acquired by P Company:Cash P36,000Accounts receivable 457,000Inventories 120,000Property, plant and equipment 696,400Goodwill 200,000Accounts payable 350,800P Company paid P1.4M for the net assets of S Company. It was determined that fair market values of inventories and property, plant and equipment were P133,000 and P900,000, respectively.An assumed contingent liability with a fair value amounting to P20,000 and such amount is considered a reliable measurement. Also, a P50,000 future losses or reorganization/ restructuring costs are expected to be incurred as a result of the business combination.In the books of P Company, how will be the amount of Goodwill arising from business combination?
What is the goodwill arising from the acquisition?
1. The Judi Company purchased another entity for P8,000,000 cash. A schedule of the fair value of the acquired entity's assets and liabilities is prepared as of the purchase date. Cash Accounts Receivable Inventory Property, plant and equipment 6,550,000 Accounts payable Notes Payable - Bank (long-term) 1,950,000 Net assets at fair value 100,000 850,000 1,300,000 4,300,000 950,000 1,000,000 4,600,000 Compute for the amount of goodwill using residual approach. a. P 1,450,000 b. 3,400,000 c. P 4,600,000 d. P 2,900,000
Please explain how 820 000 derive.
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7. JBC purchased an ongoing business for P10,000,000 cash. The assets and liabilities of the acquired business measured at fair value are: Cash Accounts Receivable Inventory Land Plant and equipment Accounts Payable Bonds Payable 525,000 c. P 625,000 d. P 400,000 2,075,000 2,500,000 4,125,000 6,065,000 (895,000) What is the amount of gain on bargain purchase? a. P 500,000 b. P 550,000 (3,895,000)
2. ABC Company purchased an entity for $6,500,000 cash at the beginning of the current year. The carrying amount and fair value of the assets of the acquired entity on the date of acquisition are: Carrying Amount Fair Value 50,000 50,000 Cash Accounts Receivable Inventory Patent Property, plant and equipment 3,000,000 600,000 1,000,000 30,000 2,000,000 600,000 1,500,000 200,000 In Addition, the acquired entity had accounts payable only totaling P500,000 at the time of acquisition. The acquired entity has no other separately identifiable intangible assets. Compute for the amount of goodwill using residual approach. a. P 2,700,000 b. P 2,820,000 c. P 2,320,000 d. P 1,650,000
Ee 361.
Purple Corp. purchased all of the listed assets and liabilities of Sudden Corp. for $1,600,000. The following assets and liabilities were purchased:Book Value Fair MarketValueAccounts receivables $ 140,000 $ 140,000 Inventory 168,000 256,000 Property, plant, and equipment (net) 820,000 1,040,000 Patent 0 276,000 Liabilities (170,000 ) (170,000 )________________________________________ Required:1. What is the appropriate amount that would be recorded for goodwill? 2. Prepare the journal entry for the acquisition. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Preston Company acquired the assets (except for cash) and assumed the liabilities of Saville Company. Immediately prior to the acquisition, Saville Company’s balance sheet was as follows: Book Value Fair Value Cash $122,900 $122,900 Receivables (net) 207,560 232,240 Inventory 361,510 389,840 Plant and equipment (net) 459,200 573,420 Land 417,050 617,650 Total assets $1,568,220 $1,936,050 Current Liabilities $526,250 $596,650 Common stock ($5 par value) 477,680 Other contributed capital 126,920 Retained earnings 437,370 Total equities $1,568,220 (a) Prepare the journal entries on the books of Preston Company to record the purchase of the assets and assumption of the liabilities of Saville Company if the amount paid was $1,567,060 in cash. (If no entry is required, select "No Entry" for the account titles and enter 0 for the…
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30. Lake Incorporated purchased Huron Company for $850,000 cash. Lake assumed all of the liabilities. Book values and fair values of acquired assets and liabilities were: Current assets Property, plant, equipment Liabilities Lake should record goodwill of: A. $0. B. C. D. $150,000. $345,000. $850,000. Book Value Fair Value $125,000 750,000 175,000 $130,000 600,000 175,000