1.On January 1, 202X, Yanna Corporation acquired the net assets of Migo Corporation by issuing 100,000 shares with par and market values of P22 and P3,250,000, respectively. Moreover, it agreed to pay an additional P300,000 on January 1, 202Z if the average income in 202X and 202Y exceeds P160,000 per year. The expected value of the additional payment is equal to a 52% probability of achieving the target average income.

The fair value of the assets and liabilities of Jandra Company as of the acquisition date is given below:

Cash P220,000

Marketable Securities 330,000

Inventory 650,000

Land 460,000

Building 950,000

Equipment 500,000

Unrecognized Receivables 225,000

Total P3,335,000

Current Liabilities P275,000

Bonds Payable 670,000

Premium on Bonds Payable 60,000

Total Liabilities P1,005,000

Required:

a.Determine the amount of goodwill or gain on bargain purchases that should be recognized at the acquisition date.

b.Give the adjusting entry to be made by Yanna Corporation if it estimated as of July 1, 202Y that there is a 63% probability of achieving the target income.

2.Mashiho Company acquires 18% of Junkyu Company's stock for P700,000 cash and carries the investment as a financial asset. A few months later, Mashiho purchases another 70% percent of Junkyu Company's stock for P2,520,000. At the said date, Junkyu Company reports identifiable assets with a book value of P3,900,000 and a fair value of P5,250,000. Its liabilities have a book and fair values of P1,500,000 and 1,900,000, respectively.

Required:

1.Determine the amount of goodwill or gain on bargain purchase that should be recognized if the non- controlling interest is measured on a proportionate basis.

2.Determine the amount of goodwill or gain on bargain purchase that should be recognized if the non- controlling interest is measured on a fair value basis.