On January 1, 20x1, ABC Co. acquired 75% interest in XYZ, Inc. for P2,500,000 cash. ABC Co. incurred transaction costs of P250,000 for legal, accounting and consultancy fees in negotiating the business combination. ABC Co. elected to measure NCI at the NCI's proportionate share in XYZ, Inc.'s identifiable net assets. The carrying amounts and fair values of XYZ's assets and liabilities at the acquisition date were as follows: Assets Carrying amounts 25,000 425,000 Fair values Cash in bank 25,000 Accounts receivable 300,000 875,000 Inventory 1,300,000 Equipment – net Goodwill 2,500,000 250,000 4,500,000 2,750,000 50,000 4,000,000 Total assets Liabilities Payables 1,000,000 1,000,000 How much is the goodwill (gain on a bargain purchase)?
On January 1, 20x1, ABC Co. acquired 75% interest in XYZ, Inc. for P2,500,000 cash. ABC Co. incurred transaction costs of P250,000 for legal, accounting and consultancy fees in negotiating the business combination. ABC Co. elected to measure NCI at the NCI's proportionate share in XYZ, Inc.'s identifiable net assets. The carrying amounts and fair values of XYZ's assets and liabilities at the acquisition date were as follows: Assets Carrying amounts 25,000 425,000 Fair values Cash in bank 25,000 Accounts receivable 300,000 875,000 Inventory 1,300,000 Equipment – net Goodwill 2,500,000 250,000 4,500,000 2,750,000 50,000 4,000,000 Total assets Liabilities Payables 1,000,000 1,000,000 How much is the goodwill (gain on a bargain purchase)?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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How much is the
Transcribed Image Text:On January 1, 20x1, ABC Co. acquired 75% interest in XYZ, Inc. for P2,500,000 cash. ABC Co. incurred transaction costs of P250,000 for
legal, accounting and consultancy fees in negotiating the business combination. ABC Co. elected to measure NCI at the NCI's
proportionate share in XYZ, Inc.'s identifiable net assets. The carrying amounts and fair values of XYZ's assets and liabilities at the
acquisition date were as follows:
Carrying amounts
Fair values
Assets
Cash in bank
25,000
25,000
Accounts receivable
425,000
300,000
Inventory
1,300,000
875,000
Equipment – net
2,500,000
2,750,000
Goodwill
250,000
50,000
4,000,000
Total assets
4,500,000
Liabilities
Payables
1,000,000
1,000,000
How much is the goodwill (gain on a bargain purchase)?
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