PROBLEM II. P Company paid P3,600,000 for 80% interest in S Company on January 2, 2020. The book values and fair values of S Company's assets and liabilities on this date are as follows: Book Value Fair Value Current Assets P2,300,000 P2,500,000 Noncurrent Assets 3,600,000 3,800,000 Liabilities 2,000,000 2,100,000 The increase in the value of the current assets is attributable to inventories which were all sold in 2020 whereas the increase in value of noncurrent assets is attributable to a depreciable asset with 5 years remaining useful life. The parent opted to measure NCI proportionate to its share of subsidiary's identifiable net assets. 1. If S reported net income of P450,000 and declared dividends of P320,000, compute for the NCINIS. 2. Using data in #1, compute for the NCINAS.

Hamilton Companys balance sheet on January 1, 2019, was as follows: Korbel Company is considering purchasing Hamilton (a privately held company) and discovers the following about Hamilton: a. No allowance for doubtful accounts has been established. A 10,000 allowance is considered appropriate. b. Marketable securities are valued at cost. The current market value is 60,000. c. The LIFO inventory method is used. The FIFO inventory of 140,000 would be used if the company is acquired. d. Land, included in property, plant, and equipment, which is recorded at its cost of 50,000, is worth 120,000. The remaining property, plant, and equipment is worth 10% more than its depreciated cost. e. The company has an unrecorded trademark that is worth 70,000. f. The companys bonds are currently trading for 130,000. g. The pension liability is understated by 40,000. Required: 1. Compute the amount of goodwill if Korbel agrees to pay 500,000 cash for Hamilton. 2. Next Level What are the reasons that the book value of Hamiltons net identifiable assets differ from their market value? 3. Prepare the journal entry to record the acquisition on the books of Korbel assuming Hamilton is liquidated. 4. If Korbel agrees to pay only 400,000 cash, how much goodwill exists? 5. If Korbel pays only 400,000 cash, prepare the journal entry to record the acquisition on its books, assuming Hamilton is liquidated.