1. On January 1, 202X, Yanna Corporation acquired the net assets of Migo Corporation by issuing 100,000 shares with par and market values of P22 and P3,250,000, respectively. Moreover, it agreed to pay an additional P300,000 on January 1, 202Z if the average income in 202x and 202Y exceeds P160,000 per year. The expected value of the additional payment is equal to a 52% probability of achieving the target average income. The fair value of the assets and liabilities of Jandra Company as of the acquisition date is given below: |Cash Marketable Securities Inventory Land Building Equipment Unrecognized Receivables Total P220,000 330,000 650,000 460,000 950,000 500,000 225,000 P3,335,000 Current Liabilities Bonds Payable Premium on Bonds Payable Total Liabilities P275,000 670,000 60,000 P1,005,000 Required: a. Determine the amount of goodwill or gain on bargain purchases that should be recognized at the acquisition date. b. Give the adjusting entry to be made by Yanna Corporation if it estimated as of July 1, 202Y that there is a 63% probability of achieving the target income.

1. On January 1, 202X, Yanna Corporation acquired the net assets of Migo Corporation by issuing 100,000 shares with par and market values of P22 and P3,250,000, respectively. Moreover, it agreed to pay an additional P300,000 on January 1, 202Z if the average income in 202x and 202Y exceeds P160,000 per year. The expected value of the additional payment is equal to a 52% probability of achieving the target average income. The fair value of the assets and liabilities of Jandra Company as of the acquisition date is given below: |Cash Marketable Securities Inventory Land Building Equipment Unrecognized Receivables Total P220,000 330,000 650,000 460,000 950,000 500,000 225,000 P3,335,000 Current Liabilities Bonds Payable Premium on Bonds Payable Total Liabilities P275,000 670,000 60,000 P1,005,000 Required: a. Determine the amount of goodwill or gain on bargain purchases that should be recognized at the acquisition date. b. Give the adjusting entry to be made by Yanna Corporation if it estimated as of July 1, 202Y that there is a 63% probability of achieving the target income.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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