The assets and liabilities of ABC were summarized as follows: Cash P66,000; Inventories P198,000; Property and Equipment (net) P396,000 and Liabilities P148,500. On April 1, 2021, the DEF Company acquired the above net assets of ABC, in a transaction properly accounted for as purchase by paying P578,750 cash. Furthermore, it was determined that the inventories ABC had a market value of P156,750 and the property and equipment of P462,000. What should be the amount recorded as goodwill by DEF as a result of the business combination?
The assets and liabilities of ABC were summarized as follows: Cash P66,000; Inventories P198,000; Property and Equipment (net) P396,000 and Liabilities P148,500. On April 1, 2021, the DEF Company acquired the above net assets of ABC, in a transaction properly accounted for as purchase by paying P578,750 cash. Furthermore, it was determined that the inventories ABC had a market value of P156,750 and the property and equipment of P462,000. What should be the amount recorded as goodwill by DEF as a result of the business combination?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
What should be the amount recorded as goodwill by DEF as a result of the business combination
A. 42,500
B. 0
C. 123,750
D. 123,200
![The assets and liabilities of ABC were summarized as follows: Cash P66,000; Inventories P198,000; Property
and Equipment (net) P396,000 and Liabilities P148,500. On April 1, 2021, the DEF Company acquired the
above net assets of ABC, in a transaction properly accounted for as purchase by paying P578,750 cash.
Furthermore, it was determined that the inventories ABC had a market value of P156,750 and the property
and equipment of P462,000. What should be the amount recorded as goodwill by DEF as a result of the
business combination?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F729af370-7bd1-4da6-bb93-e7f168330e34%2F668f2f8d-a8c6-4ea7-b19c-a754ccf28760%2Fe03lch7_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The assets and liabilities of ABC were summarized as follows: Cash P66,000; Inventories P198,000; Property
and Equipment (net) P396,000 and Liabilities P148,500. On April 1, 2021, the DEF Company acquired the
above net assets of ABC, in a transaction properly accounted for as purchase by paying P578,750 cash.
Furthermore, it was determined that the inventories ABC had a market value of P156,750 and the property
and equipment of P462,000. What should be the amount recorded as goodwill by DEF as a result of the
business combination?
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 3 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education