ABC Company acquired all of XYZ Corporation's assets and liabilities on June 30, 20X1. XYZ reported assets with a book value of P1,000,000 and liabilities of P550,000. ABC noted that XYZ included the amount P70,000 for an obsolete inventory at the acquisition date that did not appear to have any value. ABC also determined that an old machine previously used by XYZ had a fair value of P150,000 but had not been recorded by XYZ. Except for machinery and equipment, all the other assets and liabilities of XYZ approximated their fair values. In recording the transfer of assets and liabilities in its books, ABC recorded goodwill of P420,000 and paid P1,050,000 to acquire XYZ's net assets. If the book value of XYZ's machinery and equipment was P520,000, what was their fair value? Sk
ABC Company acquired all of XYZ Corporation's assets and liabilities on June 30, 20X1. XYZ reported assets with a book value of P1,000,000 and liabilities of P550,000. ABC noted that XYZ included the amount P70,000 for an obsolete inventory at the acquisition date that did not appear to have any value. ABC also determined that an old machine previously used by XYZ had a fair value of P150,000 but had not been recorded by XYZ. Except for machinery and equipment, all the other assets and liabilities of XYZ approximated their fair values. In recording the transfer of assets and liabilities in its books, ABC recorded goodwill of P420,000 and paid P1,050,000 to acquire XYZ's net assets. If the book value of XYZ's machinery and equipment was P520,000, what was their fair value? Sk
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges
Section: Chapter Questions
Problem 32P
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Transcribed Image Text:ABC Company acquired all of XYZ Corporation's assets and liabilities on
June 30, 20X1. XYZ reported assets with a book value of P1,000,000 and
liabilities of P550,000. ABC noted that XYZ included the amount P70,000
for an obsolete inventory at the acquisition date that did not appear to
have any value. ABC also determined that an old machine previously
used by XYZ had a fair value of P150,000 but had not been recorded by
XYZ. Except for machinery and equipment, all the other assets and
liabilities of XYZ approximated their fair values. In recording the transfer
of assets and liabilities in its books, ABC recorded goodwill of P420,000
and paid P1,050,000 to acquire XYZ's net assets. If the book value of
XYZ's machinery and equipment was P520,000, what was their fair
value? *
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