Hello, I'm having issues with the books problem questions. The problem is looking for the "Goodwill" If the method is needed, we've been told to use Fair value method. Presto Corboration purchased a 10% interest in Hersheys Company on January 2, 2014, as anavailable for sale investment for a price of P160,000.On January 2, 2019, Presto Corporation purchases 14,000 additional shares of Hersheys Companyfrom existing shareholders for P1,260,000. The purchase raised Presto's interest to 80%. HersheysCompany the following statement of financial position just prior to Presto's second purchase:AssetsLiabilities and EquityCurrent assets660,000 Liabilities260,000Building (net)Equipment (net)560,000 Common stock, P20 par400,000 Retained earnings1,620,000 Total liabilities and equity400,000960,000Total assets1,620,000On the date of the second purchase, Presto determines that Hersheys' equipment was undervaluedby P200,000 and had a 5-year remaining life. All other book values approximate fair values. Anyremaining excess is attributed to goodwill.

Consolidated financial statements are the financial statements of a group consisting of multiple…

Answered: Hello, I'm having issues with the books…

Hello, I'm having issues with the books problem questions. The problem is looking for the "Goodwill" If the method is needed, we've been told to use Fair value method.

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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Question

Hello, I'm having issues with the books problem questions. The problem is looking for the "Goodwill" If the method is needed, we've been told to use Fair value method.

Presto Corboration purchased a 10% interest in Hersheys Company on January 2, 2014, as an
available for sale investment for a price of P160,000.
On January 2, 2019, Presto Corporation purchases 14,000 additional shares of Hersheys Company
from existing shareholders for P1,260,000. The purchase raised Presto's interest to 80%. Hersheys
Company the following statement of financial position just prior to Presto's second purchase:
Assets
Liabilities and Equity
Current assets
660,000 Liabilities
260,000
Building (net)
Equipment (net)
560,000 Common stock, P20 par
400,000 Retained earnings
1,620,000 Total liabilities and equity
400,000
960,000
Total assets
1,620,000
On the date of the second purchase, Presto determines that Hersheys' equipment was undervalued
by P200,000 and had a 5-year remaining life. All other book values approximate fair values. Any
remaining excess is attributed to goodwill.

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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