Entity A acquired all the assets and assumed all the liabilities of Entity B for P2,800,000. On the acquisition date, Entity B's identifiable assets and liabilities have fair values of P4,000,000 and P1,600,000, respectively. Additional information: Entity B has an unrecorded patent with a fair value of P100,000. Entity B has research and development (R&D) projects with a fair value of P160,000. Entity B charged the R&D costs as expenses when they were incurred. Entity A is renting out a property to Entity B under an operating lease. The terms of the lease compared with market terms are favorable. The fair value of the differential is P40,000. Requirement: Compute for the goodwill.

Entity A acquired all the assets and assumed all the liabilities of Entity B for P2,800,000. On the acquisition date, Entity B's identifiable assets and liabilities have fair values of P4,000,000 and P1,600,000, respectively. Additional information: Entity B has an unrecorded patent with a fair value of P100,000. Entity B has research and development (R&D) projects with a fair value of P160,000. Entity B charged the R&D costs as expenses when they were incurred. Entity A is renting out a property to Entity B under an operating lease. The terms of the lease compared with market terms are favorable. The fair value of the differential is P40,000. Requirement: Compute for the goodwill.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 62P

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