On January 1, 20x1, AAA Co. acquired all of the identifiable assets and assumed all of the liabilities of BBB, Inc. On this date, the identifiable assets acquired and liabilities assumed have fair values of ₱3,200,000 and ₱1,800,000, respectively. AAA incurred the following acquisition-related costs: legal fees, ₱20,000, due diligence costs, ₱200,000, and general administrative costs of maintaining an internal acquisitions department, ₱40,000. Case #1: As consideration for the business combination, AAA Co. transferred 8,000 of its own equity instruments with par value per share of ₱200 and fair value per share of ₱250 to BBB’s former owners. Costs of registering the shares amounted to ₱80,000. How much is the goodwill (gain on bargain purchase) on the business combination? Case #2: As consideration for the business combination, AAA Co. issued bonds with face amount and fair value of ₱2,000,000. Transaction costs incurred in issuing the bonds amounted to ₱100,000. How much is the goodwill (gain on bargain purchase) on the business combination?
On January 1, 20x1, AAA Co. acquired all of the identifiable assets and assumed all of the liabilities of BBB, Inc. On this date, the identifiable assets acquired and liabilities assumed have fair values of
₱3,200,000 and ₱1,800,000, respectively. AAA incurred the following acquisition-related costs: legal fees, ₱20,000, due diligence costs, ₱200,000,
and general administrative costs of maintaining an internal acquisitions department, ₱40,000.
Case #1: As consideration for the business combination, AAA Co. transferred 8,000 of its own equity instruments with par value per share of ₱200 and fair value per share of ₱250 to BBB’s former owners.
Costs of registering the shares amounted to ₱80,000. How much is the
Case #2: As consideration for the business combination, AAA Co. issued bonds with face amount and fair value of ₱2,000,000. Transaction costs incurred in issuing the bonds amounted to ₱100,000. How
much is the goodwill (gain on bargain purchase) on the business combination?
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