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Bus Com Problem Example

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23 views

Bus Com Problem Example

Uploaded by

janellemoralest
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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PROBLEM 1: On January 1, 20x1, ABC Co.

acquired all the assets and


assumed all the liabilities of XYZ Inc. As of this date, the carrying
amounts and fair values of the assets and liabilities of XYZ acquired by
ABC are shown below:
Assets Carrying amounts Fair value
Petty cash fund 10,000 10,000
Receivables 200,000 120,000
Allowance for doubtful accounts (30,000) -
Inventory 520,000 350,000
Building – net 1,000,000 1,100,000
Goodwill 100,000 20,000
Total Assets 1,800,000 1,600,000

Liabilities
Payable 400,000 400,000

On the negotiation for the business combination, ABC Co. incurred


transaction costs amounting to P100,000 for legal, accounting, and
consultancy fees.

Case 1: If ABC Co. paid P1,500,000 cash for consideration for the
assets and liabilities of XYZ Inc., how much is the goodwill (gain on
bargain purchase) on business combination?
Case 2: If ABC Co. paid P1,000,000 cash for consideration for the
assets and liabilities of XYZ Inc., how much is the goodwill (gain on
bargain purchase) on business combination?

PROBLEM 2: On January 1, 20x1, ABC acquired 80% of the voting


shares of XYZ Inc. On this date, XYZ’s identifiable assets and liabilities
have fair values of P1,200,000 and P400,000, respectively.
Case 1: ABC Co. elects the option to measure non-controlling interest
at fair value. The independent consultant engaged by ABC Co.
determined that the fair value of the 20% non-controlling interest in
XYZ Inc. is P155,000. ABC Co. paid P1,000,000 for the 80% interest in
XYZ Inc. How much is the goodwill?
Case 2: ABC Co. elects to measure non-controlling interest at fair value.
A value of P250,000 is assigned to the non-controlling interest in XYZ
Inc. [(P1M/80%)x20%=P250,000. The consideration transferred is
P1,000,000. How much is the goodwill?
Case 3: ABC Co. elects the option to measure the NCI at non-controlling
interest’s proportionate share of XYZ Inc’s identifiable assets. ABC Co.
paid P1,000,000 for the interest acquired in XYZ Inc. How much is the
goodwill?

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