4-12. On January 1, 2020, Byron, Inc. purchased 30% of the outstanding ordinary shares of Pirates Corp. for P5,160,000 cash. Byron gained ability to exercise influence over Byron as a result of this acquisition. On the date of acquisition, the fair value of Pirates' net assets was P12,400,000. Byron has determined that the excess of the cost of the investment over its share of Pirates' net assets is attributable to goodwill. Pirates' profit for the year ended December 31, 2020 was P3,600,000. During 2020, Pirates declared and paid cash dividends of P400,000. There were no other transactions between the two companies. There was no indication of goodwill impairment. REQUIRED: Prepare entries to reflect the foregoing.
4-12. On January 1, 2020, Byron, Inc. purchased 30% of the outstanding ordinary shares of Pirates Corp. for P5,160,000 cash. Byron gained ability to exercise influence over Byron as a result of this acquisition. On the date of acquisition, the fair value of Pirates' net assets was P12,400,000. Byron has determined that the excess of the cost of the investment over its share of Pirates' net assets is attributable to goodwill. Pirates' profit for the year ended December 31, 2020 was P3,600,000. During 2020, Pirates declared and paid cash dividends of P400,000. There were no other transactions between the two companies. There was no indication of goodwill impairment. REQUIRED: Prepare entries to reflect the foregoing.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
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Transcribed Image Text:4-12. On January 1, 2020, Byron, Inc. purchased 30% of the
outstanding ordinary shares of Pirates Corp. for P5,160,000
cash. Byron gained ability to exercise influence over Byron as a
result of this acquisition. On the date of acquisition, the fair
value of Pirates' net assets was P12,400,000.
Byron has
determined that the excess of the cost of the investment over its
share of Pirates' net assets is attributable to goodwill. Pirates'
profit for the year ended December 31, 2020 was P3,600,000.
During 2020, Pirates declared and paid cash dividends of
P400,000. There were no other transactions between the two
companies. There was no indication of goodwill impairment.
REQUIRED:
Prepare entries to reflect the foregoing.
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