Homework Help is Here – Start Your Trial Now!
Business
Accounting
Compute for the goodwill.

Compute for the goodwill.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Compute for the goodwill.

On January 1, 2021, OBDURATE Co. acquired 30% ownership interest in STUBBORN, Inc. for P200,000. Because the investment gave OBDURATE significant influence over STUBBORN, the investment was accounted for under the equity method in accordance with PAS 28. From 2021 to the end of 20x3, OBDURATE recognized P100,000 net share in the profits of the associate and P20,000 share in dividends. Therefore, the carrying amount of the investment in associate account on January 1, 20x3, is P280,000. On January 1, 20x4, OBDURATE acquired additional 60% ownership interest in STUBBORN, Inc. for P1,600,000. As of this date, OBDURATE has identified the following: a. The previously held 30% interest has a fair value of P360,000. b. STUBBORN's net identifiable assets have a fair value of P2,000,000. OBDURATE elected to measure non-controlling interests at the non-controlling interest's proportionate share of STUBBORN's identifiable net assets. C. Requirement: Compute for the goodwill.
Transcribed Image Text:On January 1, 2021, OBDURATE Co. acquired 30% ownership interest in STUBBORN, Inc. for P200,000. Because the investment gave OBDURATE significant influence over STUBBORN, the investment was accounted for under the equity method in accordance with PAS 28. From 2021 to the end of 20x3, OBDURATE recognized P100,000 net share in the profits of the associate and P20,000 share in dividends. Therefore, the carrying amount of the investment in associate account on January 1, 20x3, is P280,000. On January 1, 20x4, OBDURATE acquired additional 60% ownership interest in STUBBORN, Inc. for P1,600,000. As of this date, OBDURATE has identified the following: a. The previously held 30% interest has a fair value of P360,000. b. STUBBORN's net identifiable assets have a fair value of P2,000,000. OBDURATE elected to measure non-controlling interests at the non-controlling interest's proportionate share of STUBBORN's identifiable net assets. C. Requirement: Compute for the goodwill.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Optimal Portfolio
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS