The Alhambra Company had these accounts at the time it was acquired by Kingdom Co.: P 108,000 1,371,000 Cash Accounts Receivable Inventories 360,000 PPE 1,948,200 Accounts Payable 1,052,400 Kingdom Co. paid P4,200,000 for net assets of Alhambra Company. It has determined the fair market values of investment and PPE were P399,000 and P2,700,000, respectively. An assumed contingent liability arising from past events with a fair value amounting to P30,000 and such amount is considered a reliable measurement. In the books of Kingdom Co., this transaction resulted in: • Current Assets increased by P704,400 • Goodwill recorded at P1,324,200 • Retained Earnings increased by P704,400 • Goodwill recorded at P704,400

The Alhambra Company had these accounts at the time it was acquired by Kingdom Co.: P 108,000 1,371,000 Cash Accounts Receivable Inventories 360,000 PPE 1,948,200 Accounts Payable 1,052,400 Kingdom Co. paid P4,200,000 for net assets of Alhambra Company. It has determined the fair market values of investment and PPE were P399,000 and P2,700,000, respectively. An assumed contingent liability arising from past events with a fair value amounting to P30,000 and such amount is considered a reliable measurement. In the books of Kingdom Co., this transaction resulted in: • Current Assets increased by P704,400 • Goodwill recorded at P1,324,200 • Retained Earnings increased by P704,400 • Goodwill recorded at P704,400

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 55RSCQ

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