On July 1, 20X1, ABC acquired 25% of the outstanding ordinary shares of Yellow Corp at a total cost of P7,000,000. Net assets of Yellow was only P6,000,000. Yellow's depreciable assets (10-year remaining life) has a fair value of P600,000 more than the book value. Yellow earned net profit of P5,400,000 evenly throughout the year. Yellow paid cash dividends of P1,050,000 at Dec 31, 20X1.   The entry to record the acquisition of Yellow's ordinary shares would include:     Dr Goodwill 850,000 Dr Investment in FVPL   7,000,000 Dr Investment in associate  7,000,000 Dr Investment in associate 7,150,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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On July 1, 20X1, ABC acquired 25% of the outstanding ordinary shares of Yellow Corp at a total cost of P7,000,000. Net assets of Yellow was only P6,000,000. Yellow's depreciable assets (10-year remaining life) has a fair value of P600,000 more than the book value. Yellow earned net profit of P5,400,000 evenly throughout the year. Yellow paid cash dividends of P1,050,000 at Dec 31, 20X1.

 

The entry to record the acquisition of Yellow's ordinary shares would include:

 

 

Dr Goodwill 850,000

Dr Investment in FVPL   7,000,000

Dr Investment in associate  7,000,000

Dr Investment in associate 7,150,000

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