Audi Motors acquired 80% of BMW Service Center outstanding shares on January 1, 2022 by paying cash. The consolidated statement of financial position showed the following balances at the date of acquisition.
Audi Motors acquired 80% of BMW Service Center outstanding shares on January 1, 2022 by paying cash. The consolidated
Consolidated Balances
Amount
Total Assets
15,670,000
Total Liabilities
4,575,000
Total Shareholder’s Equity
?
The book value of the net assets of BMW Services Center is P4,500,000. The assets of BMW Service Center are fairly valued except for the following:
Patent on the product that is deemed worthless, P50,000.
Unrecognized identifiable R&D of P75,000.
The fair value of the non-controlling interest is 705,000 and the book value of Audi’s equity balance is P9,500,000.
On December 31, 2022 the following information were provided by BMW Services Center:
Net income of 400,000 was recognized.
Patents remaining useful life is 4 years.
Pre-existing goodwill presented above was impaired with a current value of 120,000.
Dividends were declared amounting to P100,000.
Audi Motors recognized net income amounting to P650,000 on December 31, 2022.
1. How much is the consideration transferred?
a. 2,780,000
b. 2,765,000
c. 2,705,000
d. 2,950,000
2. How much is the goodwill or gain on bargain purchase?
a. 890,000 goodwill
b. 890,000 gain on bargain purchase
c. 720,000 goodwill
d. 720,000 gain on bargain purchase
3. How much is the Consolidated Shareholder’s Equity on December 31, 2022?
a. 12,085,000
b. 12,105,000
c. 12,107,500
d. 12,087,500
4. How much is the Consolidated Shareholder’s Equity on December 31, 2022?
a. 12,085,000
b. 12,105,000
c. 12,107,500
d. 12,087,500
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