Justin Company purchased a plant facility consisting of land and buildingfrom Joshua Company in exchange for 200,000 shares of Justin's sharecapital. On the acquisition date, Justin's shares had a closing market priceof P65 on a stock exchange while its par value is P50. The plant facility was carried in Joshua's books at P3,000,000 for the land and P8,000,000 forthe building at the exchange date. Current assessed values for the landand building, respectively are P4,500,000 and 7,000,000. How muchshould the Land be recorded in the books?

Justin Company purchased a plant facility consisting of land and buildingfrom Joshua Company in exchange for 200,000 shares of Justin's sharecapital. On the acquisition date, Justin's shares had a closing market priceof P65 on a stock exchange while its par value is P50. The plant facility was carried in Joshua's books at P3,000,000 for the land and P8,000,000 forthe building at the exchange date. Current assessed values for the landand building, respectively are P4,500,000 and 7,000,000. How muchshould the Land be recorded in the books?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter9: Acquisitions Of Property

Section: Chapter Questions

Problem 44P

See similar textbooks

Similar questions

Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the investment using the cost model. A few months later, Senpai purchases another 60% of Kohai Company’s stock for P2,592,000. At that date, Kohai Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Kohai Company is P1,080,000. Compute the amount of goodwill, using full-goodwill or fair value basis approach.
Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the investment using the cost model. A few months later, Senpai purchases another 60% of Kohai Company’s stock for P2,592,000. At that date, Kohai Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Kohai Company is P1,080,000. Compute the amount of goodwill, using full-goodwill or fair value basis approach: a. 480,000 b. 360,000 c. None of the given d. None
Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the investment using the cost model. A few months later, Senpai purchases another 60% of Kohai Company’s stock for P2,592,000. At that date, Kohai Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Kohai Company is P1,080,000. Compute for the amount of goodwill, using partial goodwill or proportionate basis approach: a. None b. 480,000 c. None of the given d. 360,000
On October 1, Takei, Inc. exchanged 8,000 shares of its ₱25 par value ordinary share for a parcel of land to be used as site for a new plant. Takei's ordinary share had a fair value of ₱80 per share on the exchange date. Takei received ₱36,000 from the sale of scrap when an existing building on the site was razed. The land should be carried at a. 200,000 b. 236,000 c. 604,000 d. 640,000 This is from Intermediate Accounting (PPE)
Cardo co purchases the net assets of allana co by issuing 50000 shares of their 20 par value shares with a fair value of 40 per share , pays 100000 cash, and payin direct and indirect cost of 75000 and 50000 respectively, determine the total amount of assets to be reported by Cardo Co. after the acquisition
On July 1, 2020, SM acquired 80% of outstanding shares of BDO in exchange for P4M cash and 100,000 preferred shares with par value of P100 and quoted price of P200. On the acquisition date, the net assets of BDO has book value of P39M but a building with remaining useful life of 10 years is overstated by P4M. On October 1, 2020, BDO sold an equipment to SM at a gain of P200,000. On the date of sale, the equipment has remaining life of 5 years. On October 1, 2020, SM rented a space to BDO at a monthly rental of P50,000. For the year ended December 31, 2020, BDO reported net income of P900,000 and declared dividends of P100,000 on December 30, 2020. On the other hand, SM reported net income of P2M on its separate income statement and declared dividends of P1,000,000. On the separate financial statements of SM, the retained earnings on December 31, 2019 is P10,000,000 while its stockholders equity is P25,000,000. SM accounted its Investment in BDO in its separate financial statements…
On June 30, 2021, ZAYN Co. acquired 75,000 of LIAM Co.'s 100,000 outstanding shares with par value per share of P1 for P4 per share.At this time, LIAM Co.'s, shares have a quoted price of P3.50 per share and LIAM's retained earnings is P80,000. Additional information: •LIAM's total assets include land classified as investment property at a cost of P180,000. The land's fair values are P200,000 on acquisition date and P320,000 on June 30, 2023. LIAM uses the cost model for its investment properties. However, the group uses the fair value model. •On acquisition date, LIAM's building classified as property, plant, and equipment had a fair value of P30,000 in excess of its carrying amount. The building's remaining useful life is 5 years. The group uses the straight line method of depreciation. •The current accounts on June 30, 2023, include intercompany receivables and payables of P10,000. •An impairment test on June 30, 2023 concluded that goodwill is impaired by P20,000. •NCI is measured…
On July 1, 2020, Bar Inc. purchased 50,000 of Tell Inc.’s preference shares in exchange of a tract of Bar’ land which was carried in the books at P1,200,000. The shares were classified as financial assets at fair value through profit or loss. The land had a fair value of P1,500,000. Meanwhile, Tell's shares had a fair value of P29 per share. How much is the gain to be recognized from the exchange of the land?
TRICKY Company acquires 25% of JOKER Corporations ordinary shards for P190,000 cash and carries the investment using the cost method. After one quarter, TRICKY Company purchases another 60% of JOKER Corporation's ordinary shares for P540,000. On this data, JOKER Corporation reports identifiable net assets with carrying value of P720,000 and fair value of P920,000. The liabilities of JOKER Corporation has a book value and fair value of 280,000. The fair value of the 15% controlling interest is P125,000. How much is the goodwill or gain on acquisition? A. P250,000 goodwill B. P17,000 goodwill C. P250,000 gain on acquisition D. P17,000 gain on acquisition
At the beginning of the current year, Boyet Company bought 40% of Aubrey Company’s outstanding ordinary shares for P3,500,000. The company also paid P700,000 to a business broker who helped find a suitable business and negotiated the purchase. The carrying amount of Aubrey Company’s net assets at the purchase date totaled P9,000,000. The difference was attributed to plant which had a carrying amount of P1,100,000 and a fair value of P2,000,000 and to inventory which had a carrying amount of P250,000 and a fair value of P350,000. The plant has 18-year life. All inventory was sold during the current year. During the current year, the investee reported net income of P1,200,000 and paid a P200,000 cash dividend. Of the amount paid for the investment, how much is attributable to goodwill? How much is the amortization of purchase differential during the current year? What amount should be reported as investment income for the current year? What is the carrying amount of the investment in…
If CARDO Co purchases the net assets of SYANO Co by issuing 5,000 shares of their P20 par value shares with a fair value of P40 per share, incurs a mortgage loan for P90,000, pays P150,000 cash and paying direct, indirect and stock issue costs of P75,000, P50,000 and P40,000 respective. Compute for the total assets at the date of acquisition
TRICKY Company acquires 25% of JOKER Corporation’s ordinary shares for P190,000 cash and carries the investment using the cost method. After one quarter, TRICKY Company purchases another 60% of JOKER Corporation’s ordinary shares for P540,000. On this date, JOKER Corporation reports identifiable net assets with carrying value of P720,000 and fair value of P920,000. The liabilities of JOKER Corporation has a book value and fair value of 280,000. The fair value of the 15% controlling interest is P125,000. How much is the goodwill or gain on acquisition?