On January 1, 20x1, John Corp. acquired the identifiable net assets of Jose Corp. by paying cash of ₱1,500,000 and issuing 10,000 ordinary shares with par and fair value of ₱100 and ₱120 per share, respectively. The identifiable assets of Jose had book values of ₱3,200,000 and fair values of ₱4,000,000 and its liabilities have book values equal to its fair values amounting to ₱1,500,000. As per agreement, John Corp. agreed to pay additional amount equal to 20% of the 20x1 year-end profit that exceeds ₱500,000 on January 2, 20x2. On the date of acquisition Jon estimated that the fair value of contingent consideration is ₱15,000. Assume the actual profit of ABC on December 31, 20x1 is ₱600,000. What is the gain (loss) on extinguishment of contingent consideration liability.

1. At the beginning of the current year, Occidental Company purchased 40% of the outstanding ordinary shares of Manapla Company for ₱3,500,000 when the net assets of Manapla amounted to ₱7,000,000.At acquisition date, the carrying amount of the identifiable assets and liabilities of Manapla were equal to their fair value, except for equipment for which the fair value was ₱1,500,000 greater than carrying amount and inventory whose fair value was ₱500,000 greater than cost.The equipment has a remaining life of 4 years and the inventory was all sold during the current year.Manapla Company reported net income of ₱4,000,000 and paid no dividends during the year. What is the maximum amount of the “equity in earnings of the investee”?a. 1,350,000b. 1,250,000c. 1,600,000d. 1,700,000 2. At the beginning of the current year, Bing Company purchased 30,000 shares of Latt Company’s 200,000 outstanding ordinary shares for ₱6,000,000. On that date, the carrying amount of the acquired shares on Latt’s…

On January 1, 2002, Capitech Corporation acquired Logirun, Inc. as a long-term investment for ₱250,000 (a 30 percent ordinary share interest in Logirun). On that date, Logirun had net assets with a book value and fair value of ₱800,000. During 2002, Logirun reported profit of ₱90,000 and declared and paid cash dividends of ₱20,000. What is the maximum amount of income that Capitech should report from this investment for 2002? 6,000                                                 26,750           21,000                                                27,000

At the beginning of the current year, Occidental Company purchased 40% of the outstanding ordinary shares of Manapla Company for ₱3,500,000 when the net assets of Manapla amounted to ₱7,000,000. At acquisition date, the carrying amount of the identifiable assets and liabilities of Manapla were equal to their fair value, except for equipment for which the fair value was ₱1,500,000 greater than carrying amount and inventory whose fair value was ₱500,000 greater than cost. The equipment has a remaining life of 4 years and the inventory was all sold during the current year. Manapla Company reported net income of ₱4,000,000 and paid no dividends during the year. What is the maximum amount of the “equity in earnings of the investee”. a. 1,350,000b. 1,250,000c. 1,600,000d. 1,700,000 What is the solution for the option A?

On October 17, ORANGE Company issued 15,000 shares of its ₱100 par ordinary share in acquiring a land that has a fair value of ₱ 1,700,000 during that date. The ordinary share is actively selling at ₱120 per share. On December 31, the land has a fair value of ₱2,100,000. At what amount should the Land be recorded in the books of Orange?

On January 1, 2019, ALUCARD Co. acquired 80% interest in BERTHOLD, Inc. by issuing 5,000 shares with fair value of ₱15 per share. On this date, BERTHOLD’s equity comprised of ₱50,000 share capital and ₱24,000 retained earnings. NCI was measured at its proportionate share in BERTHOLD’s net identifiable assets.   BERTHOLD’s assets and liabilities on January 1, 2019 approximate their fair values except for the following: BERTHOLD, Inc. Carrying amounts Fair values Fair value adjustments (FVA)  Inventory   23,000 31,000 8,000  Equipment (4 yrs. remaining life)   50,000 60,000 10,000  Accumulated depreciation (10,000) (12,000) (2,000)  Totals  63,000  79,000        16,000   BERTHOLD, Inc. declared and paid dividends of ₱6,000 during 2019. There was no impairment in goodwill. The year-end individual statements of profit or loss are shown below:   Statements of profit or loss For the year ended December 31, 2019   ALUCARD Co.…

On October 26, 20x1, Entity A acquired 100% interest in Entity B for P2,800,000. On this date, Entity B's identifiable assets and liabilities have fair values of P4,000,000 and P1,600,000, respectively. Included in Entity B's liabilities are cash dividends of P280,000 declared on October 1, 20x1, to shareholders of record on November 1, 20x1, and payable on December 1, 20x1. Requirement: Compute for the goodwill.

In 20x3, SKEPTICAL incurred constructive obligation of ₱480,000 in favor of QUESTIONING and made payments of ₱320,000 on behalf of QUESTIONING.    In relation to the investment in QUESTIONING shares, what amounts should SKEPTICAL Co. report in its statement of profit or loss in the following years?           20x1             20x2             20x3             20x4 a. (1,120,000) (280,000) (800,000) 600,000 b. (1,120,000) (400,000) (800,000) 600,000 c. (1,120,000) (280,000)             0 800,000 d. (800,000)              0             0 800,000

On 30 June 20X7, Edison Ltd acquired all the assets and liabilities of Oliver Ltd, with Oliver Ltd going into liquidation. In exchange for these assets and liabilities, Edison Ltd issued 60,000 shares, and the fair value of each share at the acquisition date is $4. Costs of issuing these shares amounted to $2,000. Legal costs associated with the acquisition of Oliver Ltd amounted to $1,500. The assets and liabilities of Oliver Ltd at 30 June 20X7 were as follows: Carrying amount Fair value Cash 12 000 12 000 Accounts receivable (Cost: $45 000, Estimated uncollectable debts: $5000) 40 000 36 000 Inventory 60 000 76 000 Plant (Cost: $200 000, Accumulated 120 000 145 000 depreciation: $80 000) Accounts payable 40 000 40 000 Additional information: • Oliver Ltd had not recorded an internally developed patent. Edison Ltd valued this at $26,000. Oliver Ltd had not recorded a legal claim as a liability due to the uncertainty of an outcome. Edison Ltd estimated the fair value of this…

On January 1, 20x1, AAA Co. acquired 80% of the equity interests of BBB, Inc. in exchange for cash. Because the former owners of BBB needed to dispose of their investments in BBB by a specified date, they did not have sufficient time to market BBB to multiple potential buyers.As January 1, 20x1, BBB’s identifiable assets and liabilities have fair values of ₱2,400,000 and ₱800,000, respectively. Case #1:AAA Co. elects the option to measure non-controlling interest at fair value. An independent consultant was engaged who determined that the fair value of the 20% non-controlling interest in BBB, Inc. is₱310,000. If AAA Co. paid ₱2,000,000 cash as consideration for the 80% interest in BBB, Inc., how much is thegoodwill (gain on bargain purchase) on the business combination? Case #2:AAA Co. elects the option to measure non-controlling interest at fair value. An independent consultantwas engaged who determined that the fair value of the 20% non-controlling interest in BBB, Inc. is₱310,000.If…