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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
- 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
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