On January 1, 2021 ccC acquired all of the identifiable assets and assumed all liabilities of DDD by paying P4,800,000. On thisdate, identifiable assets and liabilities assumed have fair value of P7,680,000 and P4,320,000, respectively. Terms of agreementare as follows:> 20% of the price shall be paid on January 1, 2021 and the balance on December 31, 2022 (the prevailing market rate on thesame date 10%)> The acquirer shall also transfer its piece of land with book value and fair value of P2,400,000 and P1,440,000, respectively.Included in the liabilities assumed is an estimated warranty liability. The carrying amount and fair value of this warranty liabilityamounted to P576,000 and P468,000, respectively. The acquiree guarantees that the warranty liability would only be settled forP480,000. How much is the goodwill on the business combination? AAA Inc. Was merge into BBB Corp. in a combination properly accounted for as acquisition of interest. Their condensedStatement of Financial Position before the combination show:ввB Cогр.88,000420,0001,119,6001,040,000AAA Inc.CashAccounts Receivable, netInventoryProperty Plant and EquipmentPatent88,000500,0001,700,0004,654,000260,000Accounts PayableMortgage PayableCapital Stock, par P100Share PremiumRetained Earnings171,6001,000,0001,704,0002,600,0001,300,000390,0001,066,000390,0001,248,000As per independent appraiser's report, BBB's assets have fair market value of P1,653,600 for current assets, P1,248,000 for plantand equipment and P338,000 for patents. BBB's liabilities are properly valued. AAA purchases BBB's net asset for P4,000,000.Compute for the consolidated asset after acquisition.

Consolidated assets are determined according to GAAP. They are those assets which should be listed…

On January 1, 2021 CcC acquired all of the identifiable assets and assumed all liabilities of DDD by paying P4,800,000. On this date, identifiable assets and liabilities assumed have fair value of P7,680,000 and P4,320,000, respectively. Terms of agreement are as follows: > 20% of the price shall be paid on January 1, 2021 and the balance on December 31, 2022 (the prevailing market rate on the same date 10%) > The acquirer shall also transfer its piece of land with book value and fair value of P2,400,000 and P1,440,000, respectively. Included in the liabilities assumed is an estimated warranty liability. The carrying amount and fair value of this warranty liability amounted to P576,000 and P468,000, respectively. The acquiree guarantees that the warranty liability would only be settled for P480,000. How much is the goodwill on the business combination?

On January 1, 2021 CcC acquired all of the identifiable assets and assumed all liabilities of DDD by paying P4,800,000. On this date, identifiable assets and liabilities assumed have fair value of P7,680,000 and P4,320,000, respectively. Terms of agreement are as follows: > 20% of the price shall be paid on January 1, 2021 and the balance on December 31, 2022 (the prevailing market rate on the same date 10%) > The acquirer shall also transfer its piece of land with book value and fair value of P2,400,000 and P1,440,000, respectively. Included in the liabilities assumed is an estimated warranty liability. The carrying amount and fair value of this warranty liability amounted to P576,000 and P468,000, respectively. The acquiree guarantees that the warranty liability would only be settled for P480,000. How much is the goodwill on the business combination?

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 2DIC

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