How much is the goodwill (gain on bargain ourchase)? On January 1, 20x1, ABC Co. acquired 75% interest in XYZ, Inc. for P2,500,000 cash. ABC Co. incurred transaction costs of P250,000 forlegal, accounting and consultancy fees in negotiating the business combination. ABC Co. elected to measure NCI at the NCI'sproportionate share in XYZ, Inc.'s identifiable net assets. The carrying amounts and fair values of XYZ's assets and liabilities at theacquisition date were as follows:Carrying amountsFair valuesAssetsCash in bank25,00025,000Accounts receivable425,000300,000Inventory1,300,000875,000Equipment – net2,500,0002,750,000Goodwill250,00050,0004,000,000Total assets4,500,000LiabilitiesPayables1,000,0001,000,000How much is the goodwill (gain on a bargain purchase)?

Calculation of Net Assets - Fair value: = Total Assets - Goodwill - Liabilities = P4,000,000 -…

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How much is the goodwill (gain on bargain ourchase)?

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter7: Corporations: Reorganizations

Section: Chapter Questions

Problem 21P

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