(A)On January 1, 20x4, MM Inc., exchanged P178,000 for 25 percent of AD Corporation. MM appropriately applied the equity method to this investment. At January I. the book values of AD's assets and liabilities approximated their fair values.

(B)On June 30, 20x4, MM paid P560,000 for an additional 70 percent of AD thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to AD's total fair value. At June 30, the carrying values of AD's assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill.

(C)AD reports the following amounts at December 31, 20x4 (credit balances shown in parentheses):

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . .

P(210,000)

Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .

140,000

Retained earnings, January 1 . . . . . . . . . .

(200,000)

Dividends, October 1 . . . . . . . . . . . . . . . . . .

20,000

Common stock . . . . . . . . . . . . . . . . . . . . . .

(500,000)

(D)AD's revenue and expenses were distributed evenly throughout the year and no changes in AD's stock have occurred.

(E) Required:Using the acquisition method, compute the following:

1. The acquisition-date fair value of AD to be included in MM's consolidated financial statements.
2. The revaluation gain (or loss) reported by MM for its 25 percent investment in AD on June 30.
3. The amount of goodwill recognized by MM on its December 31 balance sheet (assume no impairments have been recognized).
4. The non-controlling interest amount reported by MM on its:
5. June 30 consolidated balance sheet.
6. December 31 consolidated balance sheet.