On January 1, 20x1, Ai Inc. acquired all the assets and liabilities of Pon Corp. for P1,200,000. Pon Corpassets and liabilities have a fair value of P2,500,000 and P1,300,000, respectively. Additional Information: ● Ai is the exclusive distributor of Pon's products. The agreement has a remaining term of five years. The contract does not have any cancellation clause. ● The agreement has a fair value of P400,000, of which 30% is "at the market.” The off-market component is unfavorable to the Ai Inc. ● No assets and liabilities related to the contract were recognized. How much is the "gain of bargain purchase" to be recognized by Ai Inc. as a result of the business combination?
On January 1, 20x1, Ai Inc. acquired all the assets and liabilities of Pon Corp. for P1,200,000. Pon Corpassets and liabilities have a fair value of P2,500,000 and P1,300,000, respectively. Additional Information: ● Ai is the exclusive distributor of Pon's products. The agreement has a remaining term of five years. The contract does not have any cancellation clause. ● The agreement has a fair value of P400,000, of which 30% is "at the market.” The off-market component is unfavorable to the Ai Inc. ● No assets and liabilities related to the contract were recognized. How much is the "gain of bargain purchase" to be recognized by Ai Inc. as a result of the business combination?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 19RE
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Question
On January 1, 20x1,
P1,200,000. Pon Corpassets and liabilities have a fair value of P2,500,000 and
P1,300,000, respectively.
Additional Information:
● Ai is the exclusive distributor of Pon's products. The agreement has a
remaining term of five years. The contract does not have any cancellation
clause.
● The agreement has a fair value of P400,000, of which 30% is "at the market.”
The off-market component is unfavorable to the Ai Inc.
● No assets and liabilities related to the contract were recognized.
How much is the "gain of bargain purchase" to be recognized by Ai Inc. as a result of
the business combination?
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