On June 30, 2020, Pearl Co. acquired 80% of the outstanding shares of Scott Co. for P3,125,000. On this date Pearl Co.’s net assets had book value of P5,000,000 but with a fair value of P4,062,500. The liabilities of Scott Co have a book and fair value of P250,000. Pearl Co. paid P62,500 to a CPA Lawyer who facilitated the combination. The fair value of the non-controlling interest on this date was P750,000. Compute the goodwill (gain from bargain price) arising from the above combination a. P62,500 b. P75,000 c. P(62,500) d. P(125,000)
On June 30, 2020, Pearl Co. acquired 80% of the outstanding shares of Scott Co. for P3,125,000. On this date Pearl Co.’s net assets had book value of P5,000,000 but with a fair value of P4,062,500. The liabilities of Scott Co have a book and fair value of P250,000. Pearl Co. paid P62,500 to a CPA Lawyer who facilitated the combination. The fair value of the non-controlling interest on this date was P750,000. Compute the goodwill (gain from bargain price) arising from the above combination a. P62,500 b. P75,000 c. P(62,500) d. P(125,000)
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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On June 30, 2020, Pearl Co. acquired 80% of the outstanding shares of Scott Co. for P3,125,000. On
this date Pearl Co.’s net assets had book value of P5,000,000 but with a fair value of P4,062,500. The
liabilities of Scott Co have a book and fair value of P250,000. Pearl Co. paid P62,500 to a CPA Lawyer who facilitated the combination. The fair value of the non-controlling interest on this date was P750,000.
Compute the
a. P62,500
b. P75,000
c. P(62,500)
d. P(125,000)
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