Use the following information for the next 2 items: 2022 Formula One World Championship pre-season testing session just started and due to the porpoising safety issues of the Formula One cars of Mclaren Racing Limited, the price of its shares plummeted. This event gave Red Bull Racing Ltd. the opportunity to bugfy 45% of outstanding stocks of Mclaren Racing Ltd on March 5, 2022. It was noted that Red Bull Racing Ltd. owned 10% of the outstanding shares of Mclaren Racing Ltd amounting to P1,000,000 as of June 30, 2021 and accounted it as investment in equity securities through profit or loss. The following information showed the book value and fair values of Mclaren Racing Limited on March 5, 2022. Book Value Fair Value Total Assets 12,070,000 15,300,000 Total Liabilities 2,140,000 2,140,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Use the following information for the next 2 items:
2022 Formula One World Championship pre-season testing session just started and due to the
porpoising safety issues of the Formula One cars of Mclaren Racing Limited, the price of its shares
plummeted. This event gave Red Bull Racing Ltd. the opportunity to bugfy 45% of outstanding
stocks of Mclaren Racing Ltd on March 5, 2022.
It was noted that Red Bull Racing Ltd. owned 10% of the outstanding shares of Mclaren Racing
Ltd amounting to P1,000,000 as of June 30, 2021 and accounted it as investment in equity
securities through profit or loss.
The following information showed the book value and fair values of Mclaren Racing Limited on
March 5, 2022.
Book Value
Fair Value
Total Assets
12,070,000
15,300,000
Total Liabilities
2,140,000
2,140,000
Additional information are as follows:
Red Bull Racing Limited total consideration transferred amounted to P6,750,000 inclusive
of control premium of P250,000.
The fair value of non-controlling interest is P5,500,000.
12. How much is the goodwill or gain on bargain purchase?
a. 1,012,000
b. 1,590,000
c. 590,000
d. 956,444
13. What is the measurement of previously held shares?
a. 1,000,000
b. 1,500,000
c. 1,444,444
d. 1,250,000
Transcribed Image Text:Use the following information for the next 2 items: 2022 Formula One World Championship pre-season testing session just started and due to the porpoising safety issues of the Formula One cars of Mclaren Racing Limited, the price of its shares plummeted. This event gave Red Bull Racing Ltd. the opportunity to bugfy 45% of outstanding stocks of Mclaren Racing Ltd on March 5, 2022. It was noted that Red Bull Racing Ltd. owned 10% of the outstanding shares of Mclaren Racing Ltd amounting to P1,000,000 as of June 30, 2021 and accounted it as investment in equity securities through profit or loss. The following information showed the book value and fair values of Mclaren Racing Limited on March 5, 2022. Book Value Fair Value Total Assets 12,070,000 15,300,000 Total Liabilities 2,140,000 2,140,000 Additional information are as follows: Red Bull Racing Limited total consideration transferred amounted to P6,750,000 inclusive of control premium of P250,000. The fair value of non-controlling interest is P5,500,000. 12. How much is the goodwill or gain on bargain purchase? a. 1,012,000 b. 1,590,000 c. 590,000 d. 956,444 13. What is the measurement of previously held shares? a. 1,000,000 b. 1,500,000 c. 1,444,444 d. 1,250,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Motor Vehicle Insurance
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education