Transcribed Image Text:On January 1, 2021, ABC acquired all the assets and assumed all the liabilities of DEF Co. for P4,500,000. Relevant information
follows:
ASSETS
Fair Values
Carrying Value
55,000
Cash
55,000
800,000
Receivable
800,000
Allowance for Doubtful Accounts
150,000
700,000
3,500,000
150,000
180,000
750,000
4,000,000
200,000
1,555,0000
Inventory
Land
Goodwill
Liabilities
1,555,000
DEC Co. has research and development projects with fair value of P100,000. ABC does not intend to use those R&Ds.
However, there have been exchange transactions involving the information generated from DEF, but those transactions are
infrequent.
> All fair value adjustments result to temporary differences but do not affect the tax bases of the assets and liabilities. The
tax rate is 30%.
ABC incurred P200,000 on general administrative costs of maintaining an internal acquisition department.
Compute the goodwill (gain on bargain purchase)?
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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