Numbers 62 and 63 (Business Combination – Acquisition ofmajority shares)Entity A acquired 60,000 out of 100,000 outstanding ordinaryshares of Entity B which enabled the former to obtain control ofthe latter at an acquisition price of P1,000,000. Entity A paidP100,000 acquisition related costs and P50,000 indirect costs ofbusiness combination.At the date of acquisition, theat P1,600,000. An asset of Entity B is overvalued by P60,000while one liability is undervalued by P40,000.assets of Entity B are reporteda. What is the initial measurement of noncontrolling interestin net assets in the consolidated statement of financialposition?b. What is the goodwill or gain on bargain purchase arisingfrom business combination?

Introduction As per relevant standard if any entity acquired majority of stake in another entity…

Numbers 62 and 63 (Business Combination – Acquisition of majority shares) Entity A acquired 60,000 out of 100,000 outstanding ordinary shares of Entity B which enabled the former to obtain control of the latter at an acquisition price of P1,000,000. Entity A paid P100,000 acquisition related costs and P50,000 indirect costs of business combination. At the date of acquisition, the net assets of Entity B are reported at P1,600,000. An asset of Entity B is overvalued by P60,000 while one liability is undervalued by P40,000. a. What is the initial measurement of noncontrolling interest in net assets in the consolidated statement of financial position? b. What is the goodwill or gain on bargain purchase arising from business combination?

Numbers 62 and 63 (Business Combination – Acquisition of majority shares) Entity A acquired 60,000 out of 100,000 outstanding ordinary shares of Entity B which enabled the former to obtain control of the latter at an acquisition price of P1,000,000. Entity A paid P100,000 acquisition related costs and P50,000 indirect costs of business combination. At the date of acquisition, the net assets of Entity B are reported at P1,600,000. An asset of Entity B is overvalued by P60,000 while one liability is undervalued by P40,000. a. What is the initial measurement of noncontrolling interest in net assets in the consolidated statement of financial position? b. What is the goodwill or gain on bargain purchase arising from business combination?

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

Numbers 62 and 63 (Business Combination – Acquisition of
majority shares)
Entity A acquired 60,000 out of 100,000 outstanding ordinary
shares of Entity B which enabled the former to obtain control of
the latter at an acquisition price of P1,000,000. Entity A paid
P100,000 acquisition related costs and P50,000 indirect costs of
business combination.
At the date of acquisition, the
at P1,600,000. An asset of Entity B is overvalued by P60,000
while one liability is undervalued by P40,000.
assets of Entity B are reported
a. What is the initial measurement of noncontrolling interest
in net assets in the consolidated statement of financial
position?
b. What is the goodwill or gain on bargain purchase arising
from business combination?

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