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. 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
. 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.
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