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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.

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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
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:

    1. How much is the goodwill recognized on acquisition date?
    2. Entity B's 20x1 profit is P3,800,000. Entity A issues the additional shares on January 14, 20x2. Provide the journal entries.
    3. Entity B's 20x1 profit is P2,800,000. Provide the journal entries.
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