Compute the goodwil (gain on bargain purchase)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Compute the goodwil (gain on bargain purchase)

On January 1, 2021, Grey Co. Acquires 80% of the outstanding voting shares of Cristine Corp. Cristine Corp.'s
identifiable assets and liabilities have fair values of P3,400,000 and P1,700,000, respectively. Relevant information
follows:
> Grey Co. Agrees to pay Cristine's former owners P2,000,000 cash, half of which is to be paid on January 1,
2021, while the other half will be paid in five equal annual installments starting December31, 2021. The
current market rate of interest on January 1, 2021 is 12%
> Grey Co. Also agrees to provide a technical know-how to be used in Cristine's operations after the business
combination. The technical know-how has a fair value of P200,000
Grey Co. Opts to measure the non-controlling interest at the NCI's proportionate share in Cristine's net
identifiable assets
Compute the goodwill (gain on bargain purchase).
Transcribed Image Text:On January 1, 2021, Grey Co. Acquires 80% of the outstanding voting shares of Cristine Corp. Cristine Corp.'s identifiable assets and liabilities have fair values of P3,400,000 and P1,700,000, respectively. Relevant information follows: > Grey Co. Agrees to pay Cristine's former owners P2,000,000 cash, half of which is to be paid on January 1, 2021, while the other half will be paid in five equal annual installments starting December31, 2021. The current market rate of interest on January 1, 2021 is 12% > Grey Co. Also agrees to provide a technical know-how to be used in Cristine's operations after the business combination. The technical know-how has a fair value of P200,000 Grey Co. Opts to measure the non-controlling interest at the NCI's proportionate share in Cristine's net identifiable assets Compute the goodwill (gain on bargain purchase).
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