On January 1, 2020, Pfizer Corp. acquired 80% of Vaxx Corp.’s common stock for P160,000 cash. The fair value of the non-controlling interest at the date was determined to be P40,000. Data from the balance sheets of the two companies included the following accounts as of the date of acquisition:   On the date of the business combination, the book values of Vaxx Corp’s net assets and liabilities approximated fair value except for inventory, which has a fair value of P45,000, and land, which had a fair value of P60,000. (using full goodwill approach).     Pfizer Corporation Vaxx Corporation Cash 60,000 20,000 Accounts receivable 80,000 30,000 Inventory 90,000 40,000 Land 100,000 40,000 Buildings and equipment 200,000 150,000 Less: Accumulated depreciation (80,000) (50,000) Investment in Vaxx Corp. stock 160,000 -            Total Assets 610,000 230,000       Accounts payable 110,000 30,000 Bonds payable 95,000 40,000 Common stock 200,000 40,000 Retained earnings 205,000 120,000 Total Liabilities and Equity 610,000 230,000   What amount of goodwill method will be reported in the consolidated balance sheet prepared immediately after the business combination?  Group of answer choices a. 20,000 b. Zero c. 40,000 d. 15,000

On January 1, 2020, Paloma Corporation exchanged $1,710,000 cash for 90 percent of the outstanding voting stock of San Marco Company. The consideration transferred by Paloma provided a reasonable basis for assessing the total January 1, 2020, fair value of San Marco Company. At the acquisition date, San Marco reported the following owners’ equity amounts in its balance sheet: Common stock $400,000 Additional paid-in capital 60,000 Retained earnings 265,000 In determining its acquisition offer, Paloma noted that the values for San Marco’s recorded assets and liabilities approximated their fair values. Paloma also observed that San Marco had developed internally a customer base with an assessed fair value of $800,000 that was not reflected on San Marco’s books. Paloma expected both cost and revenue synergies from the combination. At the acquisition date, Paloma prepared the following fair-value allocation schedule: Fair value of San Marco Company $1,900,000…

The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2021, follow. Gibson acquired a 60 percent interest in Keller on January 1, 2020, in exchange for various considerations totaling $1,050,000. At the acquisition date, the fair value of the noncontrolling interest was $700,000 and Keller’s book value was $1,400,000. Keller had developed internally a customer list that was not recorded on its books but had an acquisition-date fair value of $350,000. This intangible asset is being amortized over 20 years. Gibson uses the partial equity method to account for its investment in Keller. Gibson sold Keller land with a book value of $80,000 on January 2, 2020, for $180,000. Keller still holds this land at the end of the current year. Keller regularly transfers inventory to Gibson. In 2020, it shipped inventory costing $280,000 to Gibson at a price of $400,000. During 2021, intra-entity shipments totaled $450,000, although the original cost…

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ABC Company acquired 80% of DEF Company outstanding shares on January 1, 2022 by paying cash. The consolidated statement of financial position showed the following balances at the date of acquisition. Consolidated Balances Amount Total Assets 15,670,000 Total Liabilities 4,575,000 Total Shareholder’s Equity ? The book value of the net assets of DEF Company is P4,500,000. The assets of DEF Company are fairly valued except for the following: • Patent on the product that is deemed worthless, P50,000.• Goodwill of P150,000.• Unrecognized identifiable R&D of P75,000. The fair value of the non-controlling interest is 705,000 and the book value of ABC Company equity balance is P9,500,000. On December 31, 2022 the following information were provided by DEF Company:• Net income of 400,000 was recognized.• Patents remaining useful life is 4 years.• Pre-existing goodwill presented above was impaired with a current value of 120,000.• Dividends were declared amounting to P100,000.…

On 1 July 2019, Canola Ltd acquired 100% of the share capital to gain control of Palm Ltd.  The following intra-group transactions occurred during the financial year ending 30 June 2020.   (i)        During the 2019 - 2010 financial year, Canola Ltd sold inventory to Palm Ltd for $1,000,000.  Canola Ltd purchased this inventory at $700,000. By 30 June 2020, Palm Ltd has sold 70% of that inventory to an outside third party.    (ii)       Palm Ltd sold a vehicle to Canola Ltd for $100000. The vehicle had been fully depreciated by Palm Ltd at 30 June 2020 and valued at $0 on Palm’s books.     Required: Prepare the journal entries required to eliminate the intra-group transactions above. Ignore any tax effects.  When are consolidated profits recorded for inventory transfers within the group?

On 1 July 2020, Sky Ltd acquired 70% of the share capital (ex. div.) of Jim Ltd for $500,000. At that date, the relevant balances in the records of Jim Ltd were: Share capital General reserve Retained earnings Dividend payable S 434,000 35,000 126,000 14,000 At the date of acquisition all assets and liabilities of Jim Ltd were recorded in the accounting records at amounts equal to their fair values with the exception of the following assets: Carrying amount Fair value Land Machine 56,000 30,800 Land was sold on 1 May 2023 for $77,000. $ 67,200 49,000 The cost of the Machine was $58,800 and had a further 5-year life as at the date of acquisition. Jim Ltd had reported a Contingent liability at 1 July 2020 in relation to claims by customers for damaged goods. Sky Ltd placed a fair value of $12,600 on these claims at acquisition date. This claim was settled on 1 April 2023 for $7,000. Additional information: a) On 1 March 2023, Jim Ltd purchased inventory from Sky Ltd for $25,200,…

On January 1, 2021, Gooch Company acquires 80% of the outstanding common stock of House Inc., for a purchase price of $12,400,000. It was determined that the fair value of the noncontrolling interest in the subsidiary is $3,100,000. The book value of the House’s stockholders’ equity on the date of acquisition is $10,000,000 and its fair value of identifiable net assets is $10,850,000. The acquisition-date acquisition accounting premium (AAP) is allocated $600,000 to equipment with a remaining useful life of 10 years, and $250,000 to a patent with a remaining useful life of 5 years.Determine the total goodwill to be recognized at acquisition date. Select one: A. $ 4,650,000 B. $ 4,400,000 C. $-0- D. $23,400,000

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On July 31, 2020, Ivanhoe Company paid $3,000,000 to acquire all of the common stock of Conchita Incorporated, which became a division (a reporting unit) of Ivanhoe. Conchita reported the following balance sheet at the time of the acquisition. Current assets   $750,000   Current liabilities   $500,000 Noncurrent assets   2,700,000   Long-term liabilities   400,000    Total assets   $3,450,000   Stockholders’ equity   2,550,000            Total liabilities and stockholders’ equity   $3,450,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita was $2,755,000. Over the next 6 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 31, 2020, Conchita reports the following balance sheet information. Current assets   $480,000   Noncurrent assets…