Audi Motors acquired 80% of BMW Service Center outstanding shares on January 1, 2022 by paying cash. The consolidated statement of financial position showed the following balances at the date of acquisition. Consolidated Balances Amount Total Assets 15,670,000 Total Liabilities 4,575,000 Total Shareholder’s Equity ? The book value of the net assets of BMW Services Center is P4,500,000. The assets of BMW Service Center are fairly valued except for the following: Patent on the product that is deemed worthless, P50,000. Goodwill of P150,000. Unrecognized identifiable R&D of P75,000. The fair value of the non-controlling interest is 705,000 and the book value of Audi’s equity balance is P9,500,000. On December 31, 2022 the following information were provided by BMW Services Center: Net income of 400,000 was recognized. Patents remaining useful life is 4 years. Pre-existing goodwill presented above was impaired with a current value of 120,000. Dividends were declared amounting to P100,000. Audi Motors recognized net income amounting to P650,000 on December 31, 2022. a. How much is the consideration transferred? b. How much is the goodwill or gain on bargain purchase? c. How much is the Consolidated Shareholder’s Equity on December 31, 2022? d. How much is the Consolidated Shareholder’s Equity on December 31, 2022?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Audi Motors acquired 80% of BMW Service Center outstanding shares on January 1, 2022 by paying cash. The consolidated statement of financial position showed the following balances at the date of acquisition.

Consolidated Balances	Amount
Total Assets	15,670,000
Total Liabilities	4,575,000
Total Shareholder’s Equity	?

The book value of the net assets of BMW Services Center is P4,500,000. The assets of BMW Service Center are fairly valued except for the following:

Patent on the product that is deemed worthless, P50,000.
Goodwill of P150,000.
Unrecognized identifiable R&D of P75,000.

The fair value of the non-controlling interest is 705,000 and the book value of Audi’s equity balance is P9,500,000.

On December 31, 2022 the following information were provided by BMW Services Center:

Net income of 400,000 was recognized.
Patents remaining useful life is 4 years.
Pre-existing goodwill presented above was impaired with a current value of 120,000.
Dividends were declared amounting to P100,000.

Audi Motors recognized net income amounting to P650,000 on December 31, 2022.

a. How much is the consideration transferred?

b. How much is the goodwill or gain on bargain purchase?

c. How much is the Consolidated Shareholder’s Equity on December 31, 2022?

d. How much is the Consolidated Shareholder’s Equity on December 31, 2022?

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