AAA Inc. Was merge into BBB Corp. in a combination properly accounted for as acquisition of interest. Their condensedStatement of Financial Position before the combination show:ввB Cогр.88,000420,0001,119,6001,040,000260,000171,600AAA Inc.Cash88,000500,0001,700,0004,654,000Accounts Receivable, netInventoryProperty Plant and EquipmentPatentAccounts PayableMortgage PayableCapital Stock, par P100Share PremiumRetained Earnings1,000,0001,704,0002,600,000390,0001,300,000390,0001,066,0001,248,000As per independent appraiser's report, BBB's assets have fair market value of P1,653,600 for current assets, P1,248,000 for plantand equipment and P338,000 for patents. BBB's liabilities are properly valued. AAA purchases BBB's net asset for P4,000,000.Compute for the consolidated asset after acquisition. On January 1, 2021, ABC acquired all the assets and assumed all the liabilities of DEF Co. for P4,500,000. Relevant informationfollows:ASSETSFair ValuesCarrying Value55,000Cash55,000800,000Receivable800,000Allowance for Doubtful Accounts150,000180,000750,0004,000,000200,0001,555,0000InventoryLand700,0003,500,000150,000GoodwillLiabilities1,555,000DEC Co. has research and development projects with fair value of P100,000. ABC does not intend to use those R&Ds.However, there have been exchange transactions involving the information generated from DEF, but those transactions areinfrequent.> All fair value adjustments result to temporary differences but do not affect the tax bases of the assets and liabilities. Thetax rate is 30%.ABC incurred P200,000 on general administrative costs of maintaining an internal acquisition department.Compute the goodwill (gain on bargain purchase)?

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AAA Inc. Was merge into BBB Corp. in a combination properly accounted for as acquisition of interest. Their condensed Statement of Financial Position before the combination show: AAA Inc. ВBB Coгр. Cash Accounts Receivable, net 88,000 500,000 1,700,000 88,000 420,000 Inventory 1,119,600 Property Plant and Equipment 4,654,000 1,040,000 Patent 260,000 171,600 Accounts Payable Mortgage Payable Capital Stock, par P100 Share Premium Retained Earnings 1,000,000 1,704,000 2,600,000 390,000 1,248,000 1,300,000 390,000 1,066,000 As per independent appraiser's report, BBB's assets have fair market value of P1,653,600 for current assets, P1,248,000 for plant and equipment and P338,000 for patents. BBB's liabilities are properly valued. AAA purchases BBB's net asset for P4,000,000. Compute for the consolidated asset after acquisition.

AAA Inc. Was merge into BBB Corp. in a combination properly accounted for as acquisition of interest. Their condensed Statement of Financial Position before the combination show: AAA Inc. ВBB Coгр. Cash Accounts Receivable, net 88,000 500,000 1,700,000 88,000 420,000 Inventory 1,119,600 Property Plant and Equipment 4,654,000 1,040,000 Patent 260,000 171,600 Accounts Payable Mortgage Payable Capital Stock, par P100 Share Premium Retained Earnings 1,000,000 1,704,000 2,600,000 390,000 1,248,000 1,300,000 390,000 1,066,000 As per independent appraiser's report, BBB's assets have fair market value of P1,653,600 for current assets, P1,248,000 for plant and equipment and P338,000 for patents. BBB's liabilities are properly valued. AAA purchases BBB's net asset for P4,000,000. Compute for the consolidated asset after acquisition.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 2DIC

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