CPA corporation purchased a 10% interest in ABC co. on January 1, 2021 as an available for sale investment for a price of P120,000. On January 1, 2022, CPA purchase 7,000 additional shares of ABC from existing stockholders for P945,000. This purchase increased CPA's interest to 70%. ABC had the following statement of financial position just prior to the second purchase. Current Assets 495,000 Building, Net Equipment, Net 420,000 300,000 Liabilities 195,000 Common Stock, P30 par Retained Earnings 300,000 720,000 On the date of second purchase, CPA determines that the equipment was understated by 150,000 and had a remaining life of 5yrs. All other book values approximate their fair values. Any remaining excess is attributed to goodwill. On January 1, 2022 consolidated financial position, what is the amount of goodwill to be reported?
CPA corporation purchased a 10% interest in ABC co. on January 1, 2021 as an available for sale investment for a price of P120,000. On January 1, 2022, CPA purchase 7,000 additional shares of ABC from existing stockholders for P945,000. This purchase increased CPA's interest to 70%. ABC had the following statement of financial position just prior to the second purchase. Current Assets 495,000 Building, Net Equipment, Net 420,000 300,000 Liabilities 195,000 Common Stock, P30 par Retained Earnings 300,000 720,000 On the date of second purchase, CPA determines that the equipment was understated by 150,000 and had a remaining life of 5yrs. All other book values approximate their fair values. Any remaining excess is attributed to goodwill. On January 1, 2022 consolidated financial position, what is the amount of goodwill to be reported?
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 34P
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Transcribed Image Text:CPA corporation purchased a 10% interest in ABC co. on January 1, 2021 as an available for sale investment for a
price of P120,000.
On January 1, 2022, CPA purchase 7,000 additional shares of ABC from existing stockholders for P945,000. This
purchase increased CPA's interest to 70%. ABC had the following statement of financial position just prior to the
second purchase.
Current Assets
495,000
Building, Net
Equipment, Net
420,000
300,000
Liabilities
195,000
Common Stock, P30 par
Retained Earnings
300,000
720,000
On the date of second purchase, CPA determines that the equipment was understated by 150,000 and had a
remaining life of 5yrs. All other book values approximate their fair values. Any remaining excess is attributed to
goodwill.
On January 1, 2022 consolidated financial position, what is the amount of goodwill to be reported?
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