Multiple Choice

1.) ABC acquired 65% of DEFs voting ordinary shares for P468,000, P108,000 above the net assets of SDEs book value on January 2, 2021. The difference attributable to an equipment which is amortized over 10 years. What is the effect of the purchase difference on the 2023 net income attributable to owners of the parent?

A.) 21,600

B.) (32,400)

C.) (10,800)

D.) (16,615)

2.) ABC Ent, purchases 90% of the outstanding voting shares of DEF Corp on January 1, 2021. On that date,

A.) ABCs Non-controlling interest account will include 10% of the acquisition differential on the Date of Acquisition.

B.) ABCs Non-controlling interest account will include 10% of the fair value of DEFs net asset.

C.) ABCs Non-controlling interest account will include 10% of the book value of DEFs net assets

D.) ABCs Non-controlling interest account will include 10% of any unallocated portion of the acquisition differential on the Date of Acquisition.

3.) On January 2, 2021. ABC corporation acquired 75% of the outstanding ordinary shares of DEF Company for P513,000 cash, excluding direct acquisition costs. The investment was accounted for by the cost method. On January 2, 2021, DEFs identifiable net assets (book value and fair value) were P570,000. DEFs net income for the year ended December 31, 2021 was P304,000. During 2021, ABC received P21,600 cash dividends from SDEF. There were no other inter-company transactions. The balance of the Non-controlling interest in Net assets of subsidiary account on December 31, 2021 is

A.) 218,500

B.) 211,300

C.) 218,300

D.) 76,000

4.) ABCs assets and liabilities were as follows: Cash and Receivables P75,000; Merchandise Inventory P187,500; Building and Equipment (net of depreciation of P100,000); Current Liabilities P87,500. On December 31, 2021, DEF Company paid P618,750 cash for all the outstanding share of ABC. On the day of business combination, the fair value of the merchandise inventory was P156,250 and the fair value of the building and equipment (net) was P481,250. The goodwill (gain on bargain purchase) resulting form this acquisition amounts to

A.) (18,750)

B.) (6,250)

C.) 18,750

D.) 6,250