1. Refer to Park Corporation and Strand Corporation, the amount of goodwill using proportionate basis (partial):P -0-P8,000P10,000P20,000The amount of goodwill using full fair value (full/gross-up) basis:P -0-P8,000P10,000P20,000 On January 1, 20x4. Park Corporation and Strand Corporation and their condensed balance sheetare as follows:Current AssetsNon-current AssetsTotal AssetsCurrent LiabilitiesLong-term DebtStockholders' EquityTotal Liabilities and EquitiesPark CorpP 70,00090,000P160,000P 30,00050,00080,000P160,000Strand CorpP 20,00040,000P60,000P 10,00050,000P60,000On January 2, 20x4, Park Corporation borrowed P60,000 and used the proceeds to obtain a 80% ofthe outstanding common shares of Strand Corporation. The P60,000 debt is payable in 10 equalannual principal payments, plus interest, beginning December 31, 20x4. The excess fair value of theinvestment over the underlying book value of the acquired net assets is allocated to inventory (60%)and to goodwill (40%).On a consolidated balance sheet as of January 2. 20x4, what should be the amount for each of thefollowing?

The cost of investment includes the cash transferred, Fair value of assets transferred, fair value…

Answered: On January 1, 20x4. Park Corporation…

On January 1, 20x4. Park Corporation and Strand Corporation and their condensed balance sheet are as follows: Current Assets Non-current Assets Park Corp P 70,000 90,000 Strand Corp P 20,000 40,000

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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Question

1. Refer to Park Corporation and Strand Corporation, the amount of goodwill using proportionate basis (partial): P -0- P8,000 P10,000 P20,000 The amount of goodwill using full fair value (full/gross-up) basis: P -0- P8,000 P10,000 P20,000

On January 1, 20x4. Park Corporation and Strand Corporation and their condensed balance sheet
are as follows:
Current Assets
Non-current Assets
Total Assets
Current Liabilities
Long-term Debt
Stockholders' Equity
Total Liabilities and Equities
Park Corp
P 70,000
90,000
P160,000
P 30,000
50,000
80,000
P160,000
Strand Corp
P 20,000
40,000
P60,000
P 10,000
50,000
P60,000
On January 2, 20x4, Park Corporation borrowed P60,000 and used the proceeds to obtain a 80% of
the outstanding common shares of Strand Corporation. The P60,000 debt is payable in 10 equal
annual principal payments, plus interest, beginning December 31, 20x4. The excess fair value of the
investment over the underlying book value of the acquired net assets is allocated to inventory (60%)
and to goodwill (40%).
On a consolidated balance sheet as of January 2. 20x4, what should be the amount for each of the
following?

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

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