On January 1, 20x1, Entity A acquires 100% interest in entity B in exchange for Entity A’s 10,000 shares with par value per share of P20 and fair value of P200 per share. Entity B’s net identifiable assets have a fair value of P1,900,000. In addition, entity A agrees to issue additional 2,000 shares if entity B’s 20x1 profit will exceed P3,600,000. The fair value of the contingent consideration is P280,000. Requirements: How much is the goodwill recognized on acquisition date? Entity B's 20x1 profit is P3,800,000. Entity A issues the additional shares on January 14, 20x2. Provide the journal entries. Entity B's 20x1 profit is P2,800,000. Provide the journal entries.
On January 1, 20x1, Entity A acquires 100% interest in entity B in exchange for Entity A’s 10,000 shares with par value per share of P20 and fair value of P200 per share. Entity B’s net identifiable assets have a fair value of P1,900,000. In addition, entity A agrees to issue additional 2,000 shares if entity B’s 20x1 profit will exceed P3,600,000. The fair value of the contingent consideration is P280,000. Requirements: How much is the goodwill recognized on acquisition date? Entity B's 20x1 profit is P3,800,000. Entity A issues the additional shares on January 14, 20x2. Provide the journal entries. Entity B's 20x1 profit is P2,800,000. Provide the journal entries.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 20x1, Entity A acquires 100% interest in entity B in exchange for Entity A’s 10,000 shares with par value per share of P20 and fair value of P200 per share. Entity B’s net identifiable assets have a fair value of P1,900,000. In addition, entity A agrees to issue additional 2,000 shares if entity B’s 20x1 profit will exceed P3,600,000. The fair value of the contingent consideration is P280,000.
Requirements:
- How much is the
goodwill recognized on acquisition date? - Entity B's 20x1 profit is P3,800,000. Entity A issues the additional shares on January 14, 20x2. Provide the
journal entries. - Entity B's 20x1 profit is P2,800,000. Provide the journal entries.
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