Illustration 1. Measuring Goodwill/Gain on Bargain Purchase On January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below:
Illustration 1. Measuring Goodwill/Gain on Bargain Purchase On January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Illustration 1. Measuring
On January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below:
On the negotiation for the business combination, Amahan Co. incurred the following
transaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees.
1. How much is the goodwill (gain on bargain purchase) on the business
combination?
a. (465,000.00)
b. 185,000.00
c. (190,000.00)
d. 310,000.00
![Asset
Carrying Amount
Fair Value
Petty Cash Fund
10,000.00
10,000.00
Receivables
500,000.00
350,000.00
Allowance for Doubtful Accounts
(65,000.00)
Inventory
420,000.00
280,000.00
Building
Accum. Depr.– Building
1,500,000.00
1,200,000.00
(650,000.00)
Goodwill
250,000.00
120,000.00
Total Assets
1,965,000.00
1,960,000.00
Liabilities
Payables
650,000.00
650,000.00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbb54966f-b273-419f-b37e-21b617b593dc%2F0d2b3756-99d6-41e1-a435-447e6141a8af%2Fhebq3tt_processed.png&w=3840&q=75)
Transcribed Image Text:Asset
Carrying Amount
Fair Value
Petty Cash Fund
10,000.00
10,000.00
Receivables
500,000.00
350,000.00
Allowance for Doubtful Accounts
(65,000.00)
Inventory
420,000.00
280,000.00
Building
Accum. Depr.– Building
1,500,000.00
1,200,000.00
(650,000.00)
Goodwill
250,000.00
120,000.00
Total Assets
1,965,000.00
1,960,000.00
Liabilities
Payables
650,000.00
650,000.00
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