Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

. 5 Sky Co. acquired 100% interest in Star, Inc.'s net identifiable assets with fair value of P600,000 for P800,000. The valuation of the

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

. 5 Sky Co. acquired 100% interest in Star, Inc.'s net identifiable assets with fair value of P600,000 for P800,000. The valuation of the consideration transferred includes the following: a. P30,000 reimbursement for appraisal fees incurred by Star in valuing a patent. b. P50,000 fair value of a trade secret that Sky will grant Star after the business combination. The trade secret has a carrying amount of P40,000 in Sky's books Requirement: Compute for the goodwill. Reacquired rights & Settlement of pre-existing relationship 6. On January 1, 20x1, Entity A acquires all the assets and liabilities of Entity B for P2,000,000. Entity B's identifiable assets and liabilities have fair values of P4,000,000 and P2,200,000, respectively. Additional information: Prior to the business combination, Entity B is a franchisee of Entity A. The franchise agreement has a remaining term of 5 years, which either party can terminate without any penalty. The franchise agreement has a fair value of P300,000, of which P100,000 is "at-market" value. The "off-market" value is favorable to Entity A, but unfavorable to Entity B. Entity A's related 'contract liability' account has a carrying amount of P230,000, while Entity B's related 'franchise' account has a carrying amount of P150,000. Requirement: Compute for the goodwill.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Earl K. Stice, James D. Stice

19th edition

1133957919, 978-1285632988, 1285632982, 978-0357691229, 978-1133957911

More Books

Students also viewed these Accounting questions

Question

Why do some individuals confess to a crime they did not commit?

Answered: 1 week ago

Question

Identify the ways in which disability income insurance is marketed.

Answered: 1 week ago