If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. What is the maximum term of the measurement period? Group of answer choices 6 months from the acquisition date No maximum term is provided in the standard 12 months from the acquisition date 3 months from the acquisition date

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. What is the maximum term of the measurement period? Group of answer choices 6 months from the acquisition date No maximum term is provided in the standard 12 months from the acquisition date 3 months from the acquisition date

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 22PC

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A business combination involves a contingent consideration. It is considered 80% probable that a payment of $700,000 will become payable three years after the acquisition date. Using a 5% discount rate, what liability should be recorded for the contingent consideration on the acquisition date? Select one: a. $604,686 b. $700,000 c. $483,749 d. $560,000
A business combination involves a contingent consideration. It is considered 80% probable that a payment of $700,000 will become payable three years after the acquisition date. Using a 5% discount rate, what liability should be recorded for the contingent consideration on the acquisition date? Multiple Choice $700,000 $560,000 $483,749 $604,686
Problem 7-4 (IFRS) r On September 30, 2021, when the carrying amount of the assets of a major subsidiary was P70,000,000, Young Company signed a legally binding contract to sell the subsidiary. The sale is expected to be completed by January 31, 2022 at a selling price of P60,000,000. In addition, prior to January 31, 2022, the sale contract obliged the entity to terminate the employment of certain employees of the business segment incurring an expected termination cost of P5,000,000 to be paid on June 30, 2022. The segment's revenue and expenses for 2021 were P40,000,000 and P45,000,000 respectively. The income tax rate is 30%. What amount should be reported as loss from discontinued operation for 2021? a. 10,500,000 b. 20,000,000 c. 15,000,000 d. 14,000,000
4. An entity acquired an investment in equity instrument for P800,000 on 31 March 2020. The direct acquisition costs incurred were P140,000. On 31 December 2020 the fair value of the instrument was P1,100,000 and the transaction costs that would be incurred on sale were estimated at P120,000. If the investment is designated as FA@FVTOCI, what gain would be recognized in the financial statements for the year ended 31 December 2020? Group of answer choices Nil P40,000 P160,000 P420,000
15 Clegane Company had the following acquisitions of intangible assets in 2022: Franchise On January 31, 2022, Clegane signed an agreement to operate as franchisee of Clear Copy Service, Inc. for an initial franchise of P780,000. Of this amount, P300,000 was paid when the agreement was signed and the balance was payable in four annual payments of P120,000 each, beginning January 31, 2023. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The implicit rate for loan of this type is 12%. The agreement also provides the 1.5% of the revenue from the franchise must be paid to the franchisor annually. Clegane’s revenue from the franchise in 2022 was P9,500,000. Clegane estimates the useful life of the franchise to be ten years. At the end of 2022, the franchise recoverable amount was P610,000. Trademark On March 1, 2022 Clegane purchased for P400,000 a trademark for a very successful soft drink it markets under the name…
11. On December 1, 2021, ABC Company acquired all the assets and liabilities of XYZ Inc. issuing 100,000 shares. The fair value of XYZ's assets and liabilities at this date are presented below (see image) The financial year for ABC Company is January to December. The fair value of each ABC share at acquisition date is P1.90. At the acquisition date, the acquirer could only determine a provisional fair value for the Plant. On March 9, 2022, ABC received the final value from the independent appraisal, the fair value of the Plant at acquisition date is P131,000 with a 5 year remaining useful life from date of acquisition. Determine a) Fair value of the net assets acquired b) amount of goodwill or gain from acquisition
11. On December 1, 2021, ABC Company acquired all the assets and liabilities of XYZ Inc. issuing 100,000 shares. The fair value of XYZ's assets and liabilities at this date are presented below (see image) The financial year for ABC Company is January to December. The fair value of each ABC share at acquisition date is P1.90. At the acquisition date, the acquirer could only determine a provisional fair value for the Plant. On March 9, 2022, ABC received the final value from the independent appraisal, the fair value of the Plant at acquisition date is P131,000 with a 5 year remaining useful life from date of acquisition. Determine a) Fair value of the net assets acquired b) amount of goodwill or gain from acquisition (two answers)
11. The following information pertains to Nonagon Company's biological assets at December 31, 2021: Price of assets in an active market , P 5,000,000 Estimated broker's and dealer's commissions, P 50,000 Transport and other costs expected to be incurred to bring the assets to the market, P 40,000 Selling price in a binding sale agreement, P 5,100,000 At what amount should the biological assets be presented on the statement of financial position?
Problem 18-2 (IFRS)Glorious Company acquired 40% interest in an associate, Alta - Company, for P5,000,000 on January 1, 2019. At the acquisition date, there were no differences between fair value and carrying amount of identifiable assets and liabilities. Alta Company reported net income of P2,000,000 for 2019 and P3,000,000 for 2020. On December 31, 2019 and 2020, Alta Company paid cash dividend of P800,000 and P1,000,000, respectively. a. On January 1, 2019, Alta Company sold an equipment costing P500,000 to Glorious Company for P800,000. Glorious Company applies a 10% straight line depreciation.b. On July 1, 2020, Alta Company sold an equipment for P900,000 to Glorious Company. The carrying amount of the equipment is P500,000 at the time of sale. The remaining life of the equipment is 5 years and Glorious Company uses the straight line depreciation. c. On December 1, 2020, Alta Company sold an inventory to: Glorious Company for P2,800,000.The inventory had a cost of P2,000,000 and…
1. What is the gain on remeasurement to equity to be recognized for 2021?a. 1,500,000b. 4,500,000c. 2,250,000d. 0 2. What is the goodwill arising from the acquisition on January 1, 2021?a. 2,250,000b. 1,250,000c. 1,350,000d. 350,000 3. What is the carrying amount of the investment in associate on December 31, 2021?a. 11,250,000b. 11,800,000c. 12,000,000d. 14,300,000
Problem 18-1 (IFRS)On January 1, 2019, Heaven Company acquired 20% of the ordinary shares of an associate for P6,000,000. On this date, all the identifiable assets and liabilities of the associate were recorded at fair value. An analysis of the acquisition showed that the goodwill ofP300,000 was acquired. The net income and dividend of the associate were as follows 2019 2020 Net income 3,000,000 4,000,000 Dividend paid 1,000,000 1,500,000 In December 2019, the associate sold inventory to Heaven Company for P900,000. The cost of the inventory was P600,000.This inventory remained unsold by Heaven Company on December 31, 2019. However, it was sold by Heaven Company in 2020.In December 2020, the associate sold inventory to Heaver. Company for P750,000. The cost of the inventory was P500,000. This inventory remained unsold by Heaven Company on December 31, 2020. Required:1. Determine the investor's…
An entity acquired an investment in equity instrument for P800,000 on 31 March 2020. The direct acquisition costs incurred were P140,000. On 31 December 2020 the fair value of the instrument was P1,100,000 and the transaction costs that would be incurred on sale were estimated at P120,000. If the investment is designated as FA@FVTOCI, what gain would be recognized in the financial statements for the year ended 31 December 2020? A. Nil B. 40,000 C. 160,000 D. 420,000