On January 1, 2020, Papa acquired all the identifiable assets and assumed all of the liabilities of Mama by paying cash of P5,000,000. On this date, Mama’s identifiable assets and liabilities have fair values of P8,000,000 and P P4,000,000, respectively. Papa agrees to pay an additional amount equal to 10% of the 2020 year end profit that exceeds P2,000,000. Mama historically has reported profits of P1,600,000 to P2,200,000 each year. After assessing the expected level of profits for the year based on the forecast and plans, as well as industry trends. Papa estimated that the fair value of the contingent consideration is P50,000. Required: Compute the goodwill or gain on bargain purchase and prepare the necessary journal entries
On January 1, 2020, Papa acquired all the identifiable assets and assumed all of the liabilities of Mama by paying cash of P5,000,000. On this date, Mama’s identifiable assets and liabilities have fair values of P8,000,000 and P P4,000,000, respectively. Papa agrees to pay an additional amount equal to 10% of the 2020 year end profit that exceeds P2,000,000. Mama historically has reported profits of P1,600,000 to P2,200,000 each year. After assessing the expected level of profits for the year based on the forecast and plans, as well as industry trends. Papa estimated that the fair value of the contingent consideration is P50,000. Required: Compute the goodwill or gain on bargain purchase and prepare the necessary journal entries
Chapter6: Deductions And Losses: In General
Section: Chapter Questions
Problem 56P
Related questions
Question
On January 1, 2020, Papa acquired all the identifiable assets and assumed all of the liabilities of Mama by paying cash of P5,000,000. On this date, Mama’s identifiable assets and liabilities have fair values of P8,000,000 and P P4,000,000, respectively.
Papa agrees to pay an additional amount equal to 10% of the 2020 year end profit that exceeds P2,000,000. Mama historically has reported profits of P1,600,000 to P2,200,000 each year.
After assessing the expected level of profits for the year based on the forecast and plans, as well as industry trends. Papa estimated that the fair value of the contingent consideration is P50,000.
Required: Compute the goodwill or gain on bargain purchase and prepare the necessary journal entries
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
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
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Individual Income Taxes](https://www.bartleby.com/isbn_cover_images/9780357109731/9780357109731_smallCoverImage.gif)
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT