Shareholders of the two companies agree that a single class of shares be issued, that their contributions be measured by net assets plus allowances for goodwill, and that 10% be considered as a normal rate of return. Earnings in excess of the normal rate of return shall be capitalized at 20% in calculating goodwill. It was also agreed that the authorized capital stock of the new corporation shall be 20,000 shares with a par value of P100 per share. The amount of goodwill credited to Co. A, and the total contribution of Co. B (net assets plus goodwill) is: a. P100,000; P400,000 b. P100,000; P600,000 c. P150,000; P500,000 d. P200,000; P600,000

Shareholders of the two companies agree that a single class of shares be issued, that their contributions be measured by net assets plus allowances for goodwill, and that 10% be considered as a normal rate of return. Earnings in excess of the normal rate of return shall be capitalized at 20% in calculating goodwill. It was also agreed that the authorized capital stock of the new corporation shall be 20,000 shares with a par value of P100 per share. The amount of goodwill credited to Co. A, and the total contribution of Co. B (net assets plus goodwill) is: a. P100,000; P400,000 b. P100,000; P600,000 c. P150,000; P500,000 d. P200,000; P600,000

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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