Father Corporation (FC) acquires 20% ownership interest in Son Corporation (SC) on January 1, 202X, for P1,750,000 cash, which is the fair value of the investment at that date. FC has concluded that it does not have a significant influence over SC. AL the same date, the fair and carrying values of SC's identifable assets is P5,000,.000 and P3,000,000. The identifiable assets includ values of P4.000.000 and P3,000,000, respectively. e land, which has fair and carrying For the year ended December 31, 202X, SC reported a profi of P3,000,000 but did not pay any dividends. Moreover, the fair value of SC's land increases by P1.500,000. However, the carying amount of the land remains unchanged at P3,000,000. Given below is the Statement of Financial Position (SFP) of SC, together with the fair values of the identifiable assels, at December 31, 202X: Cash and Receivables Land Carrying Amount 4.000.000 3,000,000 Fair Value 4.000.000 5,500,000 Ordinary Shares Retained Eamings 2,500,000 4.500.000 On January 1, 202Y, FC acquired another 60% ownership interest in SC for P11,000,000 cash. FC's initial investment was measured at its fair value of P3,500.000. However, SC's 1,000,000 ardinary shares have a quoted price of P15 per share on December 31, 202X. Therefore, the carrying amount of FC's initial investment was remeasured to P3,000.000 on December 31, 202X. The Pi 250,000 increase was recognized as a component of ather comprehensive income. FC's SFP on December 31, 202X before the acquisition of the 60% interest was as follows: Cash Investment in SC Carrying Amount 4.000.000 3.000.000 Ordinary Shares Unrealized Gain on Equity Investment - FVTOCI 2.500.000 4.500.000 Required a Determine the goodwill or gain on bargain purchase from the above acquisilion if the NCI is to be valued on a proportionale basis.
Father Corporation (FC) acquires 20% ownership interest in Son Corporation (SC) on January 1, 202X, for P1,750,000 cash, which is the fair value of the investment at that date. FC has concluded that it does not have a significant influence over SC. AL the same date, the fair and carrying values of SC's identifable assets is P5,000,.000 and P3,000,000. The identifiable assets includ values of P4.000.000 and P3,000,000, respectively. e land, which has fair and carrying For the year ended December 31, 202X, SC reported a profi of P3,000,000 but did not pay any dividends. Moreover, the fair value of SC's land increases by P1.500,000. However, the carying amount of the land remains unchanged at P3,000,000. Given below is the Statement of Financial Position (SFP) of SC, together with the fair values of the identifiable assels, at December 31, 202X: Cash and Receivables Land Carrying Amount 4.000.000 3,000,000 Fair Value 4.000.000 5,500,000 Ordinary Shares Retained Eamings 2,500,000 4.500.000 On January 1, 202Y, FC acquired another 60% ownership interest in SC for P11,000,000 cash. FC's initial investment was measured at its fair value of P3,500.000. However, SC's 1,000,000 ardinary shares have a quoted price of P15 per share on December 31, 202X. Therefore, the carrying amount of FC's initial investment was remeasured to P3,000.000 on December 31, 202X. The Pi 250,000 increase was recognized as a component of ather comprehensive income. FC's SFP on December 31, 202X before the acquisition of the 60% interest was as follows: Cash Investment in SC Carrying Amount 4.000.000 3.000.000 Ordinary Shares Unrealized Gain on Equity Investment - FVTOCI 2.500.000 4.500.000 Required a Determine the goodwill or gain on bargain purchase from the above acquisilion if the NCI is to be valued on a proportionale basis.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:3. Father Corporation (FC) acquires 20% ownership interest in Son Corporation (SC) on January 1, 202X, for
P1,750,000 cash, which is the fair value of the investment at that date. FC has concluded that it does not
have a significant influence over SC. At the same date, the fair and carrying values of SC's identifiable
assets is P5,000,000 and P3,000,000. The identifiable assets include land, which has fair and carrying
values of P4,000,000 and P3,000,000, respectively.
For the year ended December 31, 202X, SC reported a profit of P3,000,000 but did not pay any dividends.
Moreover, the fair value of SC's land increases by P1,500,000. However, the carrying amount of the land
remains unchanged at P3,000,000. Given below is the Statement of Financial Position (SFP) of SC, together
with the fair values of the identifiable assets, at December 31, 202X:
Carrying Amount
4,000,000
3,000,000
Fair Value
Cash and Receivables
Land
4,000.000
5,500,000
Ordinary Shares
Retained Earnings
2,500,000
4,500,000
On January 1, 202Y, FC acquired another 60% ownership interest in SC for P11,000,000 cash. FC's initial
investment was measured at its fair value of P3,500,000. However, SC's 1,000,000 ordinary shares have a
quoted price of P15 per share on December 31, 202X. Therefore, the carrying amount of FC's initial
investment was remeasured to P3,000,000 on December 31, 202X. The P1,250,000 increase was
recognized as a component of other comprehensive income. FC's SFP on December 31, 202X before the
acquisition of the 60% interest was as follows:
Carrying Amount
4,000,000
3.000,000
Cash
Investment in SC
Ordinary Shares
Unrealized Gain on Equity Investment - FVTOCI
2,500,000
4.500.000
Required
a. Determine the goodwill or gain on bargain purchase from the above acquisition if the NCI is to be valued
on a proportionate basis.
b. Determine the balance of the NCI in FC's consolidated financial statements.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
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
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education