1. Nicole Company acquires 75% of Carl John Company (CJC) for P6,000,000. The carrying and fair values of CJC’s net assets at the time of acquisition are P4,500,000 and P4,900,000, respectively. Required: a. Determine the goodwill or gain on bargain purchase from the above acquisition if the non-controlling interest (NCI) is to be valued on a proportionate basis. b. Determine the goodwill or gain on bargain purchase from the above acquisition if the NCI is to be valued on a fair value basis.
1. Nicole Company acquires 75% of Carl John Company (CJC) for P6,000,000. The carrying and fair values
of CJC’s net assets at the time of acquisition are P4,500,000 and P4,900,000, respectively.
Required:
a. Determine the
interest (NCI) is to be valued on a proportionate basis.
b. Determine the goodwill or gain on bargain purchase from the above acquisition if the NCI is to be valued
on a fair value basis.
2. The
Current Assets P195,000
Land 1,320,000
Building 660,000
Equipment 525,000
Total Assets P2,700,000
Liabilities P525,000
Ordinary Shares, P5 par 900,00
Share Premium 825,000
Total Equities P2,700,000
All the assets and liabilities of Arthur were assumed to approximate their fair values except for land and
building. It is estimated that the land has a fair value of P2,100,000, and the fair value of the building
increased by P480,000. Ezekeil Corporation acquired 80% of Arthur’s outstanding shares for P3,000,000.
The non-controlling interest is measured at fair value.
Required:
a. Determine the goodwill or gain on bargain purchase assuming the consideration paid includes control
premium of P852,000.
b. Determine the goodwill or gain on bargain purchase assuming the consideration paid excludes control
premium of P138,000 and the fair value of the non-controlling interest is P736,500.
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