Exercise 10-6 (Algo) Goodwill [LO10-1] On March 31, 2021, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $18,500,000 in cas The book values and fair values of Barney's assets and liabilities were as follows: Book Value $ 7,500,000 12,500,000 1,150,000 5,500,000 7,500,000 Fair Value Current assets $ 9,000,000 15,500,000 1,650,000 5,500,000 7,000,000 Property, plant, and equipment Other assets Current liabilities Long-term liabilities Required: Calguloto tho
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- Luxemburg Company purchased the following investments during 2021: Initial Cost Transaction cost Fair value Year-end 2021 Security A P180,000 P5,000 P170,000 Security B 150,000 2,500 120,500 On July 31, 2022, the entity sold all of the shares of Security B for P125,800. On December 31, 2022, the shares of Security A had a fair value of P205,000. No other activity occurred during 2022 concerning the portfolio. Retained earnings before any adjustments on equity securities on December 31, 2022, is P975,000. Assuming nontrading securities, how much is the Retained earnings on December 31, 2022?m SY. 2021-2022 Problem 3 The following iInformation will be used in Question nos. 11-20 uncements Pag-ibig Corporation acquired 70% of outstanding stocks of Sagigilid Company on January 1, 2019, for P450,000 in cash. Sagigilid Company had a book value of P480,000 on that date. NCI and goodwill were to be measured using the partial goodwill approach. However, an equipment with a 5-year life was overvalued by P30,000 on Sagigilid Company's financial statements. Also, a building with a 15-year life and land were undervalued by P15,000 and P25,000 respectively. Subsequent to acquisition, Sagigilid Company reported the following: Jes slons eButton rences) Year CI Dividends Paid 2019 60,000 12,000 b OPAC 2020 80,000 30,000 2021 120,000 50,000 In accounting for investment, Pag-ibig Company uses the cost method. Selected accounts taken from the financial records of these two companies as of December 31, 2021, are as follows: Pag-ibig Corp. Sagigilid Co. Revenues-Operating 500,000 450,000…PROBLEM VI. Philippians Company, SME, purchased 60% of Seth Company on January 2, 2019 for P3,930,000 when Seth's book value was P6,300,000. On that day, the market value of the net assets of Seth equaled their book values with the following exceptions: Book value Market value Remaining life Buildings P1,850,000 P1,600,000 20 years Equipment 300,000 500,000 10 years Seth Company reported the following for 2019 and 2020: Net income (loss) P 750,000 Dividends 2019 P100,000 2020 150,000 50,000 1. How much is the NCINAS at December 31, 2020?
- PROBLEM III. On January 1, 2020, P Corporation purchase 80% of S Company's ordinary share for P810,000. P37,500 of the excess is attributable to goodwill and the balance to depreciable asset with economic life of ten years. NCI is measured at fair value on the date of acquisition. On this date, shareholders' equity of the two companies were as follows: P Corporation S Company Ordinary share P1,312,500 P300,000 Retained earnings 1,950,000 525,000 On December 31, 2020, S Company reported net income of P131,250 and paid dividends of P45,000 to Party. Party reported earnings from its own operations of 356,250 and paid dividends of P172,500. Goodwill has been impaired and should be reported at P7,500 on December 31, 2020. latlecomeoltolbutable-te-perent. NCINIS 3. NCINAS 4. Consolidated retained earnings 5. Consolidated Shareholders' EquityPROBLEM III. On January 1, 2020, P Corporation purchase 80% of S Company's ordinary share for P810,000. P37,500 of the excess is attributable to goodwill and the balance to depreciable asset with economic life of ten years. NCI is measured at fair value on the date of acquisition. On this date, shareholders' equity of the two companies were as follows: P Corporation S Company Ordinary share P1,312,500 P300,000 Retained earnings 1,950,000 525,000 On December 31, 2020, S Company reported net income of P131,250 and paid dividends of P45,000 to Party. Party reported earnings from its own operations of 356,250 and paid dividends of P172,500. Goodwill has been impaired and should be reported at P7,500 on December 31, 2020. 1. Net income attributable to parent 2. NCINISProblem 5-19 (Static) (LO 5-1, 5-3, 5-4, 5-5, 5-6, 5-7) Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2020, when Scenic had a net book value of $400,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $5,000 per year. Placid Lake's 2021 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $300,000. Scenic reported net income of $110,000. Placid Lake declared $100,000 in dividends during this period; Scenic paid $40,000. At the end of 2021, selected figures from the two companies' balance sheets were as follows: Placid Lake Scenic Inventory $ 140,000 $ 90,000 Land 600,000 200,000 Equipment (net) 400,000 300,000 During 2020, intra-entity sales of $90,000 (original cost of $54,000) were made. Only 20 percent of this inventory was still held within the consolidated entity at the end of…
- PROBLEM 32 Guillen Company acquired 30% of ABC Corporations share for P8,000,000 on July 1, 2020. ABC Corporation's identifiable net assets on the date of acquisition are P20,000,000. Guillen believes that the investee has known goodwill and the fair value of the corporation's net assets is the same as its carrying amount except for the following: a Equipment is undervalued by P2.000.000. b. Inventory's fair value is P2,000.000 greater than its carrying amount. The equipment has a remaining life of 4 years and depreciated using the straight-line method. At the end of 2020, all inventories at the acquisition date are entirely sold. On November 30, ABC Corporation pays a P2,000.000 dividend to its shareholders. During the year, ABC Corporation reported a net income of P5,000,000, 40% of these were earned in the first half of the year. The fair value of ABC Corporation's shares held by Guillen at the end of 2020 is P8,250.000. Requirements: 1. Prepare the necessary jourmal entries to…E3.5 Acquisition analysis, including fair value adjustment for plant and equipment (Section 3.6.2) On 1 October 20XO, EF Ltd acquired all the issued ordinary shares of GH Ltd. The terms of the acquisition agreement specified that EF Ltd must pay the existing shareholders of GH Ltd $1.5million immediately and a further $1.5million on 30 September 20X1. The incremental cost of short-term finance to EF Ltd is 10% p.a. At acquisition date, the issued capital and reserves of GH Ltd were as follows: Issued capital 1 200000 Retained eamings 1/10/20X0 1400000 At 1 October 20xO, the plant and equipment of GH Ltd had a carrying amount that was $150000 less than its fair value. The company income tax rate is 30%. REQUIRED (a) Prepare the general journal entries for the accounting records of EF Ltd to record: (i) the investment in GH Ltd on 1 October 20X0 (ii) the cash payment of the $1500 000 on 30 September 20X1.Question 2 Piz.5 L03.) (Goodwill, Impairment) On July 31, 2022. Mexico Company paid Se o00.o00 to acquire all of the ordinary shares of Condhita Incorporated, which became a division (cash-generating unit of Mexico. Conchita reported the following statement of financial position at the time of the acquisition $2.400,000 Non-current assets S2,700,000 Equity Current assets Total assets Soo,000 Non-curent liabihties $3.500,000 Current liabilities 500,000 600.000 Total equity and liabilities S3.500,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita was S2-750,000.Over the next6 months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December g1, 2022, Conchita reports the following statement of financial position information S 450,000 Current assets Non-eurrent assets (including goodwill recognized ia…
- PROBLEM 5 - 5 (PFRS for SMES) Shadow Company acquired the net assets of Recruit Company on July 1, 2019, and made the following entry to record the acquisition (both using PFRS for SME): Current and Non-current assets Goodwill 3,600,000 600,000 Liabilities Ordinary share capital, P1 par Share Premium 480,000 600,000 3,120,000 The agreement further provides that additional cash consideration would be paid on June 30, 2020, equal to twice the amount by which net eamings of Recruit Company exceed P300,000 with the first 12 months of acquisition. Net income was P260,000 in 2019 (earned evenly) and P160,000 for the first six months of 2020. Included in the goodwill computation and liabilities above is the fair value of the contingent consideration, which was estimated to be P80,000 as of July 1, 2019, although assessed as not probable at this date. What should be the amount of Goodwill on December 31, 2020?L2-4 Awe Company pays CU500,000,000 for a 30% interest in Groy Company on July 1, 19x2 when the book value of Groy Company's net assets equals fair value. Awe Company amortizes any goodwill from this investment over 20 years. Information related to Groy Company is as follows: 31 Desember 19x1 31 Desember 19x2 Share capital, nominal IDR 1,000 Rp600.000.000 Rp600.000.000 Retained earning 400.000.000 500.000.000 Total Shareholders' Equity 1.000.000.000 1.100.000.000 Net profit earned during the year 19x2 200.000.000 Dividend for the year 19x2 (paid on March 1 of Rp. 50,000,000 and September 1 of Rp. 50,000,000) 100.000.000 Required: calculate Awe Company's revenue from Groy Company for the year 19x2On Nov. 2th 2020, ABC Corporation paid OMR800,000 for all the issued and outstanding common stock of XYZ, Inc., in a transaction properly accounted for as an acquisition. The book values and fair values of XYZ's assets and liabilities on Nov. 2th were as follows Fair Value Book Value Cash OMR 80,000 OMR 80,000 Receivables (net) 90,000 90,000 Liabilities 175,000 175,000 Inventory 150,000 157,500 Plant and equipment (net) 460,000 410,000 The fair value of net assets is: Select one: O a. OMR(275,000) O b. OMR(525,000) OC OMR275,000 O d. OMR525,000 O e. OMR(280,000) oull lia sI O