Panda Company purchased an 80% interest of Bear Company on July 1, 2013. The consideration transferred was P45,000,000 which was estimated to include a control premium of P12,000,000. Bear Company net assets were P42,500,000 at acquisition date. Required: Compute the amount of goodwill (gain on bargain purchase) assuming Panda Company elects to measure noncontrolling interest: a. Proportionate to its share on the net assets. b. At fair value.

Panda Company purchased an 80% interest of Bear Company on July 1, 2013. The consideration transferred was P45,000,000 which was estimated to include a control premium of P12,000,000. Bear Company net assets were P42,500,000 at acquisition date. Required: Compute the amount of goodwill (gain on bargain purchase) assuming Panda Company elects to measure noncontrolling interest: a. Proportionate to its share on the net assets. b. At fair value.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 37RQSC

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Question

Required: Compute the amount of goodwill (gain on bargain purchase) assuming Panda Company elects to measure noncontrolling interest:

a. Proportionate to its share on the net assets.
b. At fair value.

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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