ABC Company acquired all of XYZ Corporation's assets and liabilities onJune 30, 20X1. XYZ reported assets witha book value of P1,000,000 andliabilities of P550,000. ABC noted that XYZ included the amount P70,000for an obsolete inventory at the acquisition date that did not appear tohave any value. ABC also determined that an old machine previously usedby XYZ had a fair value of P150,000 but had not been recorded by XYZ.Except for machinery and equipment, all the other assets and liabilities ofXYZ approximated their fair values. In recording the transfer of assets andliabilities in its books, ABC recorded goodwill of P420,000 and paidP1,050,000 to acquire XYZ's net assets. If the book value of XYZ'smachinery and equipment was P520,000, what was their fair value? *

Book value and fair value Book value is based on the original old purchase price where annual…

Answered: ABC Company acquired all of XYZ…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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ABC Company acquired all of XYZ Corporation's assets and liabilities on June 30, 20X1. XYZ reported assets with a book value of P1,000,000 and liabilities of P550,000. ABC noted that XYZ included the amount P70,000 for an obsolete inventory at the acquisition date that did not appear to have any value. ABC also determined that an old machine previously used by XYZ had a fair value of P150,000 but had not been recorded by XYZ. Except for machinery and equipment, all the other assets and liabilities of XYZ approximated their fair values. In recording the transfer of assets and liabilities in its books, ABC recorded goodwill of P420,000 and paid P1,050,000 to acquire XYZ's net assets. If the book value of XYZ's machinery and equipment was P520,000, what was their fair value? * Your answwer
ABC Company acquired all of XYZ Corporation's assets and liabilities on June 30, 20X1. XYZ reported assets with a book value of P1,000,000 and liabilities of P550,000. ABC noted that XYZ included the amount P70,000 for an obsolete inventory at the acquisition date that did not appear to have any value. ABC also determined that an old machine previously used by XYZ had a fair value of P150,000 but had not been recorded by XYZ. Except for machinery and equipment, all the other assets and liabilities of XYZ approximated their fair values. In recording the transfer of assets and liabilities in its books, ABC recorded a gain of P150,000 and paid P340,000 to acquire XYZ's net assets. If the book value of XYZ's machinery and equipment was P360,000, what was their fair value?
Tyra Company acquired all of Jay Corporation's assets and liabilities on June 30, 2021. Jay reported assets with a book value of P1,000,000 and liabilities of P550,000. Tyra noted that Jay included the amount P70,000 for an obsolete inventory at the acquisition date that did not appear to have any value. Tyra also determined that an old machine previously used by Jay had a fair value of P150,000 but had not been recorded by Jay. Except for machinery and equipment, all the other assets and liabilities of Jay approximated their fair values. In recording the transfer of assets and liabilities in its books, Tyra recorded a gain of P150,000 and paid P340,000 to acquire Jay's net assets. If the book value of Jay's machinery and equipment was P360,000, what was their fair value?
XYZ Co had the following accounts at the time it was acquired by ABC Inc (see image below). ABC paid P1,400,000 for the net assets of XYZ. It was determined that the fair market value of inventories and PPE were P133,000 and P900,000 respectively. There is an assumed contingent liability arising from past events with a fair value amounting to P10,000 and such amount is considered a reliable measurement. RQUIRED: a) Cost of Acquisition b) goodwill or gain from acquisition
XYZ Co had the following accounts at the time it was acquired by ABC Inc (see image below). ABC paid P1,400,000 for the net assets of XYZ. It was determined that the fair market value of inventories and PPE were P133,000 and P900,000 respectively. There is an assumed contingent liability arising from past events with a fair value amounting to P10,000 and such amount is considered a reliable measurement. Compute for a) Cost of Acquisition and b) goodwill or gain from acquisition (two answers)
XYZ Co had the following accounts at the time it was acquired by ABC Inc (see image below). ABC paid P1,400,000 for the net assets of XYZ. It was determined that the fair market value of inventories and PPE were P133,000 and P900,000 respectively. There is an assumed contingent liability arising from past events with a fair value amounting to P10,000 and such amount is considered a reliable measurement. Compute for a) Cost of Acquisition and b) goodwill or gain from acquisition (two answers) Cash . Accounts receivable Inventories . Plant, property, and equipment . .. Accounts payable . P. 36.000 457,000 120,000 696,400 350,800 *****
On August 1, 20x1, German Corp. acquired all the identifiable assets and assumed the liabilities of Marasigan Corp. by paying cash of P6,000,00O. Marasigan Corp assets and liabilities have a book values of P7,000,000 and P2,200,000, respectively. The book value of assets and liabilities of Marasigan Corp. is equal to its fair value, except for inventory which is overvalued by P50,000; undervalued building of P400,000; and undervalued accounts payable of P20,000. German Corp. also paid general and administrative cost of P5,000; finder's fee of P6,000 and accountants fee of P25,00O. What is the total amount of goodwill after business combination?
Del Luna Corporation concluded that the fair value of Scarlet Company was P160,000 and paid that amount to acquire all of its net assets. Scarlet reported assets with a book value of P120,000 and a fair value of 196,000 and liabilities with a book value and fair value of P46,000 on the date of combination. Del Luna also paid P6,000 to a search firm for finder’s fees related to acquisition. What amount will be recorded as goodwill by Del Luna Corporation? a. 10,000 b. 26,000 c. 16,000 d. 0
Niall Company acquired all of Ed Sheeran Corporation's assets and liabilities on June 30, 2021. Ed Sheeran reported assets with a book value of $1,000,000 and liabilities of $550,000. Niall noted that Ed Sheeran included the amount $70,000 for an obsolete inventory at the acquisition date that did not appear to have any value. Niall also determined that an old machine previously used by Ed Sheeran had a fair value of $150,000 but had not been recorded by Ed Sheeran. Except for machinery and equipment, all the other assets and liabilities of Ed Sheeran approximated their fair values. In recording the transfer of assets and liabilities in its books, Niall recorded a gain of $150,000 and paid $340,000 to acquire Ed Sheeran's net assets. If the book value of Ed Sheeran's machinery and equipment was $360,000, what was their fair value?
Ellen Company acquired all of Lil Wayne Corporation's assets and liabilities on June 30, 2021. Lil Wayne reported assets with a book value of $100,000 and liabilities of $55,000. Ellen noted that Lil Wayne included the amount $7,000 for an obsolete inventory at the acquisition date that did not appear to have any value. Ellen also determined that an old machine previously used by Lil Wayne had a fair value of $15,000 but had not been recorded by Lil Wayne. Except for machinery and equipment, all the other assets and liabilities of Lil Wayne approximated their fair values. In recording the transfer of assets and liabilities in its books, Ellen recorded a gain of $15,000 and paid $34,000 to acquire Lil Wayne's net assets. If the book value of Lil Wayne's machinery and equipment was $36,000, what was their fair value?
On March 1, 2010, JJ Corporation acquired for P 5,600,000 all of the assets of ZZ Company. On this date, the carrying value of ZZ’s identifiable assets was P4, 600,000. The current value of ZZ’s inventory was P800, 000 less than its carrying value, and the current fair value of ZZ’s plant assets was P1, 600,000 larger than its carrying amount. The current fair values of other identifiable net assets of ZZ were equal to their carrying values. The journal entry prepared by JJ to record the business combination includes a a. Debit of P 200,000 to goodwill. b. Debit of P 800,000 to inventories c. Debit of P 1,400,000 to goodwill d. Credit of P 1,600,000 to plant assets
ABC Corporation purchased XYZ Inc. The latter has the following account balances: The noncurrent assets have a fair value of P4,500,000. ABC paid the owners of XYZ a total purchase price of P4,500,000. How much is the goodwill that ABC should record from this acquisition? *refer to attached photo

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