PROBLEM 5 - 5 (PFRS for SMES)Shadow Company acquired the net assets of Recruit Company on July 1, 2019, and made thefollowing entry to record the acquisition (both using PFRS for SME):Current and Non-current assetsGoodwill3,600,000600,000LiabilitiesOrdinary share capital, P1 parShare Premium480,000600,0003,120,000The 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 P300,000with the first 12 months of acquisition. Net income was P260,000 in 2019 (earned evenly) andP160,000 for the first six months of 2020. Included in the goodwill computation and liabilitiesabove is the fair value of the contingent consideration, which was estimated to be P80,000 asof July 1, 2019, although assessed as not probable at this date.What should be the amount of Goodwill on December 31, 2020?

Shadow company acquired net assets of Recruit company on July 1, 2019 and recorded the value of…

Answered: What should be the amount of Goodwill…

Business

Accounting

What should be the amount of Goodwill on December 31, 2020?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 30E

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