COMPUTE THE GOODWILL.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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COMPUTE THE GOODWILL.

On January 1, 2021, ABC acquired all the assets and assumed all the liabilities of DEF Co. for P4,500,000. Relevant information
follows:
ASSETS
Fair Values
Carrying Value
55,000
Cash
55,000
800,000
Receivable
800,000
Allowance for Doubtful Accounts
150,000
700,000
3,500,000
150,000
180,000
750,000
4,000,000
200,000
1,555,0000
Inventory
Land
Goodwill
Liabilities
1,555,000
DEC Co. has research and development projects with fair value of P100,000. ABC does not intend to use those R&Ds.
However, there have been exchange transactions involving the information generated from DEF, but those transactions are
infrequent.
> All fair value adjustments result to temporary differences but do not affect the tax bases of the assets and liabilities. The
tax rate is 30%.
ABC incurred P200,000 on general administrative costs of maintaining an internal acquisition department.
Compute the goodwill (gain on bargain purchase)?
Transcribed Image Text:On January 1, 2021, ABC acquired all the assets and assumed all the liabilities of DEF Co. for P4,500,000. Relevant information follows: ASSETS Fair Values Carrying Value 55,000 Cash 55,000 800,000 Receivable 800,000 Allowance for Doubtful Accounts 150,000 700,000 3,500,000 150,000 180,000 750,000 4,000,000 200,000 1,555,0000 Inventory Land Goodwill Liabilities 1,555,000 DEC Co. has research and development projects with fair value of P100,000. ABC does not intend to use those R&Ds. However, there have been exchange transactions involving the information generated from DEF, but those transactions are infrequent. > All fair value adjustments result to temporary differences but do not affect the tax bases of the assets and liabilities. The tax rate is 30%. ABC incurred P200,000 on general administrative costs of maintaining an internal acquisition department. Compute the goodwill (gain on bargain purchase)?
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