Concept explainers
a.
Concept Introduction:
Amount of goodwill impairment, if any, that should be recognized at December 31, 20X4, if the fair value of the S Company reporting unit is determined to be
b.
Concept Introduction:
Goodwill: It is the excess payment made over and above the fair value of assets acquired by the parent company to the subsidiary company against the assets and liabilities acquired.
Goodwill that needs to be reported in the financial statement and amount of goodwill impairment to be recognized, if any, if Division K’s fair value is determined to be
c.
Concept Introduction:
Goodwill: It is the excess payment made over and above the fair value of assets acquired by the parent company to the subsidiary company against the assets and liabilities acquired.
Goodwill that needs to be reported in the financial statement and amount of goodwill impairment to be recognized, if any, if Division K’s fair value is determined to be
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ADV.FIN.ACCT. CONNECT+PROCTORIO PLUS
- Illustration 1. Measuring Goodwill/Gain on Bargain PurchaseOn January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below: On the negotiation for the business combination, Amahan Co. incurred the followingtransaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees. Case 1: Amahan Co. paid P1,000,000.00 cash and P 350,000.00 land with fair value ofP500,000.00 as consideration for the assets and liabilities of Anak, Inc.1. How much is the transaction costs incurred during the business combination?a. 50,000.00b. 75,000.00 c. 125,000.00d. 150,000.00 2. How much is the Consideration Transferred?a. 1,000,000.00b. 1,350,000.00c. 1,500,000.00d. 1,850,000.00 3. How Much is the Non-Controlling Interest in the acquiree?a. 0.00b. 150,000.00c. 310,000.00d. 500,000.000arrow_forwardIllustration 1. Measuring Goodwill/Gain on Bargain PurchaseOn January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below: On the negotiation for the business combination, Amahan Co. incurred the followingtransaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees. 1. How much is the previously held equity interest in the acquiree?a. 0.00b. 150,000.00c. 310,000.00d. 500,000.00 2. How much is the fair value of the net identifiable assets acquired?a. 1,965,000.00b. 1,315,000.00c. 1,310,000.00d. 1,190,000.00 3. How much is the goodwill (gain on bargain purchase) on the businesscombination?a. (465,000.00)b. 185,000.00c. (190,000.00)d. 310,000.00arrow_forwardIllustration 1. Measuring Goodwill/Gain on Bargain PurchaseOn January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below: On the negotiation for the business combination, Amahan Co. incurred the followingtransaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees. 1. How much is the goodwill (gain on bargain purchase) on the businesscombination?a. (465,000.00)b. 185,000.00c. (190,000.00)d. 310,000.00arrow_forward
- Eliminating Entries, Goodwill Polaris Company acquires all of the stock of SSC, Inc. for $60 million in cash. At the date of acquisition, SSC's current assets had a book value of $20 million, its noncurrent assets had a book value of $80 million, and its liabilities had a book value of $90 million. It is determined that the book values of SSC's net assets approximate fair value at the date of acquisition. SSC's shareholders' equity consists of capital stock of $2 million, retained earnings of $9 million (credit balance), and treasury stock of $1 million. Required Prepare the eliminating entries necessary to consolidate the balance sheet accounts of Polaris and SSC at the date of acquisition. Enter answers in millions. Description Ref. (E) Capital stock (R) Investment in SSC ¶ Debit Creditarrow_forwardPart A: For the fiscal year ended March 31, 2020, X Company, the 80%-owned subsidiary of Y Corporation, had a net income of $600,000 and declared and paid dividends of $200,000. The fiscal Year 2020 depreciation and amortization of differences between current fair values and carrying amounts of X’s identifiable net assets was $30,000, and the Fiscal Year 2020 impairment of goodwill recognized in the business combination was $1,000. Instructions: Prepare journal entries for Y Corporation to record the Fiscal Year 2020 operating results of X Company under the equity method. Part B: Included in the accounting records of the home office and the only branch, respectively, of Hamad Company were the following ledger accounts for June 2020: Investment in Ali Branch Date Explanation Debit Credit…arrow_forwardHigh, a parent company, acquired Low, an unincorporated entity, for $2,800,000. A fair value exercise performed on Low's net assets at the date of purchase showed: $'000 Property, plant and equipment 3,000 Identifiable intangible asset 500 Inventory 300 Trade receivables less payables 200 4,000 How should the purchase of Low be reflected in High's consolidated statement of financial position? Record the net assets at their values shown above and credit profit or loss with $1,200,000 Record the net assets at their values shown above and credit High's consolidated goodwill with $1,200,000 Write off the intangible asset ($500,000), record the remaining net assets at their values shown above and credit profit or loss with $700,000,000 Record the purchase as a financial asset investment at $2,800,000arrow_forward
- Professor Corporation acquired 70 percent of Scholar Corporation's common stock on December 31, 20X4, fr $102,200. The fair value of the noncontrolling interest at that date was determined to be $43,800. Data from the balance sheets of the two companies Included the following amounts as of the date of acquisition: Item Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation. Investment in Scholar Corporation Total Assets Accounts Payable Mortgage Payable Common Stock Retained Earnings Total Liabilities & Stockholders' Equity Professor Corporation $ 50,300 90,000 Scholar Corporation $21,000 44,000 130,000 75,000 60,000 30,000 410,000 250,000 (150,000) (80,000) 102,200 $ 692,500 $340,000 $ 152,500 $ 35,000 250,000 180,000 80,000 40,000 210,000 85,000 $ 692,500 $340,000 At the date of the business combination, the book values of Scholar's assets and liabilities approximated fair value except for Inventory, which had a fair value of $81,000, and…arrow_forwardOn January 1, 2021 Major acquired 60% of Minor for a cash payment of $600,000. At date of acquisition, the fair value of Minor's net assets were $300,000. Assuming there is no control premium, how much Goodwill is recorded in the consolidated financial statements $420,000 $300,000 $700,000 $60,000arrow_forwardNorthern Company acquired Southern Company. The purchase price included all Southern's assets and liabilities and was in the amount of $673,750. Below is information related to the two companies: Northern $1,052,000 Fair value of assets Fair value of liabilities Reported assets Reported liabilities Net income for the year How much goodwill will Northern record in its acquisition of Southern? 585,000 806,000 488,000 41,000 Southern $784,000 302,000 649,000 264,000 65,000arrow_forward
- Sub Corporation reports net assets of P300,000 at book value. These net assets have an estimated fair value of P350,000. Parent Corporation buys 80% ownership of Sub for P300,000; there is a control premium of P10,000 included in the purchase price.Of the goodwill reported in the consolidated balance sheet (as of date of acquisition), how much is attributable to the non-controlling interest? A. 3,000 B. 5,000 C. 2,500 D. 4,500arrow_forwardanother entity when the statement of financial position of amount of assets and liabilities: the acquiree showed net assets of P3,200,000. P4,000,000 cash all of the outstanding ordinary shares of At the current year-end, Clever Company purchased for another entity when the statement of financial position of the acquiree showed net assets of P3,200,000. The acquiree revealed the following fair value and carrying Carrying amount Fair value Property, plant and equipment, net Other assets Long-term debt 5,000,000 500,000 3,000,000 5,750,000 2,800,000 As a result of the trànsaction, what amount should be reported as goodwill at year-end? a. 350,000 b. 250,000 c. 750,000 d. 800,000arrow_forwardJam Ltd acquired all the equity in Cab Ltd on 31 December 20X4 for $360 000. At the control date, the equity of Cab was recorded as Paid-up capital of $260 000 and Retained profits of $30 000. The purchase price was based on the agreed fair values of Cab's identifiable assets and liabilities on that date. The following items were not at fair value in Cab's financial statements on the control date. Inventory Property (Cost of $250 000, Accumulated depreciation of $40 000) Carrying amount ($) 32 000 210 000 Fair value ($) 24 000 252 000 Other information: • Both Cab and the group entity account for its property by the cost model, and apply straight-line depreciation to the property. The property in Cab Ltd is expected to have a remaining life of 21 years from 31 December 20X4, and no residual value. Cab sold goods to Jam for $5,000 during FY20X5, the cost of these inventories was 4,000. All these inventories were still on hand by Jam by 31 December 20X5, the year-end. . Required: Prepare…arrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning