On January 1, 2021 CCC acquired all of the identifiable assets and assumed all liabilities of DDD by paying P4,800,000. On this date, identifiable assets and liabilities assumed have fair value of P7,680,000 and P4,320,000, respectively. Terms of agreement are as follows: 20% of the price shall be paid on January 1, 2021 and the balance on December 31, 2022 (the prevailing market rate on the same date 10%) The acquirer shall also transfer its piece of land with book value and fair value of P2,400,000 and P1,440,000, respectively. Included in the liabilities assumed is an estimated warranty liability. The carrying amount and fair value of this warranty liability amounted to P576,000 and P468,000, respectively. The acquiree guarantees that the warranty liability would only be settled for P480,000. How much is the goodwill on the business combination?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2021 CcC acquired all of the identifiable assets and assumed all liabilities of DDD by paying P4,800,000. On this
date, identifiable assets and liabilities assumed have fair value of P7,680,000 and P4,320,000, respectively. Terms of agreement
are as follows:
> 20% of the price shall be paid on January 1, 2021 and the balance on December 31, 2022 (the prevailing market rate on the
same date 10%)
> The acquirer shall also transfer its piece of land with book value and fair value of P2,400,000 and P1,440,000, respectively.
Included in the liabilities assumed is an estimated warranty liability. The carrying amount and fair value of this warranty liability
amounted to P576,000 and P468,000, respectively. The acquiree guarantees that the warranty liability would only be settled for
P480,000. How much is the goodwill on the business combination?
Transcribed Image Text:On January 1, 2021 CcC acquired all of the identifiable assets and assumed all liabilities of DDD by paying P4,800,000. On this date, identifiable assets and liabilities assumed have fair value of P7,680,000 and P4,320,000, respectively. Terms of agreement are as follows: > 20% of the price shall be paid on January 1, 2021 and the balance on December 31, 2022 (the prevailing market rate on the same date 10%) > The acquirer shall also transfer its piece of land with book value and fair value of P2,400,000 and P1,440,000, respectively. Included in the liabilities assumed is an estimated warranty liability. The carrying amount and fair value of this warranty liability amounted to P576,000 and P468,000, respectively. The acquiree guarantees that the warranty liability would only be settled for P480,000. How much is the goodwill on the business combination?
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