PROBLEM 6-8 CEBU PACIFIC COMPANY is considering to buy another entity and assembled the owing information relative to the acquiree on Dec. 31, 2020. Per Books P3,000,000 500,000 P3,500,000 Adjusted P2,850,000 500,000 P3,350,000 Assets Goodwill Liabilities Common Stock Retained Earnings P1,600,000 1,000,000 900,000 P3,500,000 P1,600,000 1,000,000 750,000 P3,350,000 Per Books Retained earnings, Jan. 1, 2018 Net income (2018- 20) Dividends (2018- 20 P700,000 650,000 (450,000) P900,000 Adjusted P600,000 600,000 (450,000) P750,000 Retained Earnings, Dec. 31, 2020 foguinment in 2020 P50,000 P75,000
PROBLEM 6-8 CEBU PACIFIC COMPANY is considering to buy another entity and assembled the owing information relative to the acquiree on Dec. 31, 2020. Per Books P3,000,000 500,000 P3,500,000 Adjusted P2,850,000 500,000 P3,350,000 Assets Goodwill Liabilities Common Stock Retained Earnings P1,600,000 1,000,000 900,000 P3,500,000 P1,600,000 1,000,000 750,000 P3,350,000 Per Books Retained earnings, Jan. 1, 2018 Net income (2018- 20) Dividends (2018- 20 P700,000 650,000 (450,000) P900,000 Adjusted P600,000 600,000 (450,000) P750,000 Retained Earnings, Dec. 31, 2020 foguinment in 2020 P50,000 P75,000
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 30E
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please help me to answer completely the required 1 and 2 of problem 6-8. Thank you!
![381
PROBLEM 6-8
CEBU PACIFIC COMPANY is considering to buy another entity and assembled the
following information relative to the acquiree on Dec. 31, 2020.
Per Books
P3,000,000
500,000
P3,500,000
Adjusted
P2,850,000
500,000
P3,350,000
Assets
Goodwill
Liabilities
P1,600,000
1,000,000
900,000
P3,500,000
P1,600,000
1,000,000
750,000
P3,350,000
Common Stock
Retained Earnings
Per Books
P700,000
650,000
(450,000)
P900,000
Adjusted
P600,000
600,000
(450,000)
P750,000
Retained earnings, Jan. 1, 2018
Net income (2018- 20)
Dividends (2018- 20
Retained Earnings, Dec. 31, 2020
Gain on sale of equipment in 2020
P50,000
P75,000
The future earnings are expected to be the same as the average normal earnings of the
past three(3) years. The average earnings in excess of the 10% normal rate are capitalized at
16% in determining goodwill.
REQUIRED:
1. Compute the amount of goodwill.
2. Compute the purchase price to be paid by Cebu Pacific Company to the acquiree.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd2dceb9b-e17b-418a-8f27-53c0fc0d32e5%2F0e83fa51-dace-4917-808b-6b30a7544aa6%2Fyy4pyp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:381
PROBLEM 6-8
CEBU PACIFIC COMPANY is considering to buy another entity and assembled the
following information relative to the acquiree on Dec. 31, 2020.
Per Books
P3,000,000
500,000
P3,500,000
Adjusted
P2,850,000
500,000
P3,350,000
Assets
Goodwill
Liabilities
P1,600,000
1,000,000
900,000
P3,500,000
P1,600,000
1,000,000
750,000
P3,350,000
Common Stock
Retained Earnings
Per Books
P700,000
650,000
(450,000)
P900,000
Adjusted
P600,000
600,000
(450,000)
P750,000
Retained earnings, Jan. 1, 2018
Net income (2018- 20)
Dividends (2018- 20
Retained Earnings, Dec. 31, 2020
Gain on sale of equipment in 2020
P50,000
P75,000
The future earnings are expected to be the same as the average normal earnings of the
past three(3) years. The average earnings in excess of the 10% normal rate are capitalized at
16% in determining goodwill.
REQUIRED:
1. Compute the amount of goodwill.
2. Compute the purchase price to be paid by Cebu Pacific Company to the acquiree.
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