6. On Jan. 1, 20x1, DIMINUTIVE Co. acquired all of the assets and assumed all of the liabilities of SMALL, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of...


6. On Jan. 1, 20x1, DIMINUTIVE Co.<br>acquired all of the assets and assumed<br>all of the liabilities of SMALL, Inc. As of<br>this date, the carrying amounts and fair<br>values of the assets and liabilities of<br>SMALL acquired by DIMINUTIVE are<br>shown below:<br>Assets<br>Carrying amounts Fair values<br>Cash in bank<br>20,000<br>20,000<br>Receivables<br>400,000<br>240,000<br>Allowance for probable losses on<br>receivables (60,000)<br>Inventory<br>1,040,000<br>700,000<br>Building - net<br>2,000,000<br>Goodwill<br>2,200,000<br>200,000<br>40,000<br>Total assets<br>3,600,000<br>3,200,000<br>Liabilities Payables<br>800,000<br>800,000<br>On the negotiation for the business<br>combination, DIMINUTIVE Co. incurred<br>transaction costs amount P200,000 for<br>legal, accounting, consultancy fees. If<br>DIMINUTIVE Co. paid P2,000,000 cash<br>as consideration for the assets and<br>liabilities of SMALL, Inc., how much is<br>the goodwill (gain on bargain purchase)<br>on the business combination?<br>

Extracted text: 6. On Jan. 1, 20x1, DIMINUTIVE Co. acquired all of the assets and assumed all of the liabilities of SMALL, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of SMALL acquired by DIMINUTIVE are shown below: Assets Carrying amounts Fair values Cash in bank 20,000 20,000 Receivables 400,000 240,000 Allowance for probable losses on receivables (60,000) Inventory 1,040,000 700,000 Building - net 2,000,000 Goodwill 2,200,000 200,000 40,000 Total assets 3,600,000 3,200,000 Liabilities Payables 800,000 800,000 On the negotiation for the business combination, DIMINUTIVE Co. incurred transaction costs amount P200,000 for legal, accounting, consultancy fees. If DIMINUTIVE Co. paid P2,000,000 cash as consideration for the assets and liabilities of SMALL, Inc., how much is the goodwill (gain on bargain purchase) on the business combination?

Jun 09, 2022
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