What amount of net increase (decrease) shall be recognized as retrospective adjustment to the result of business combination?How much goodwill shall be presented in the 2021 balance sheet? Thanos Company is acquiring the net assets of Infinity Stones Company for an agreed-upon priceof P900,000 on July 1, 2020. The value was tentatively assigned as follows:Current assets100,00050,000LandEquipmentBuildingGoodwill200,000500,000200,000Current liabilities(150,000)Values were subject to change during the measurement period. On May 31, 2021, the fair valuesof equipment and building were revised to P180,000 and P550,000, respectively. Then on July 31,2021, all the fair values were finalized as follows:P100,000Current assetsLand60,000185,000EquipmentBuildingCurrent liabilities500,000140,000

Goodwill Goodwill is treated an intangible assets of the company which was derived from the…

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What amount of net increase (decrease) shall be recognized as retrospective adjustment to the result of business combination? How much goodwill shall be presented in the 2021 balance sheet?

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

What amount of net increase (decrease) shall be recognized as retrospective adjustment to the result of business combination?

How much goodwill shall be presented in the 2021 balance sheet?

Thanos Company is acquiring the net assets of Infinity Stones Company for an agreed-upon price
of P900,000 on July 1, 2020. The value was tentatively assigned as follows:
Current assets
100,000
50,000
Land
Equipment
Building
Goodwill
200,000
500,000
200,000
Current liabilities
(150,000)
Values were subject to change during the measurement period. On May 31, 2021, the fair values
of equipment and building were revised to P180,000 and P550,000, respectively. Then on July 31,
2021, all the fair values were finalized as follows:
P100,000
Current assets
Land
60,000
185,000
Equipment
Building
Current liabilities
500,000
140,000

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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