Illustration 1. Measuring Goodwill/Gain on Bargain Purchase
On January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below:
On the negotiation for the business combination, Amahan Co. incurred the following
transaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees.
Case 1: Amahan Co. paid P1,000,000.00 cash and P 350,000.00 land with fair value of
P500,000.00 as consideration for the assets and liabilities of Anak, Inc.
1. How much is the transaction costs incurred during the business combination?
a. 50,000.00
b. 75,000.00
c. 125,000.00
d. 150,000.00
2. How much is the Consideration Transferred?
a. 1,000,000.00
b. 1,350,000.00
c. 1,500,000.00
d. 1,850,000.00
3. How Much is the Non-Controlling Interest in the acquiree?
a. 0.00
b. 150,000.00
c. 310,000.00
d. 500,000.000
Extracted text: Asset Carrying Amount Fair Value Petty Cash Fund 10,000.00 10,000.00 Receivables 500,000.00 350,000.00 Allowance for Doubtful Accounts (65,000.00) Inventory 420,000.00 280,000.00 Building Accum. Depr.– Building 1,500,000.00 1,200,000.00 (650,000.00) Goodwill 250,000.00 120,000.00 Total Assets 1,965,000.00 1,960,000.00 Liabilities Payables 650,000.00 650,000.00