Carrying amount Fair Value

Accounts Receivable 100,000 82,000

Inventory 650,000 500,000
Property, plant and equipment 9,000,000 11,000,000
Goodwill 10,000 2,000
Accounts payable (60,000) (84,000)
Total 9,700,000 11,500,000

Tool Beck Co. paid P50,000 for legal and accounting fees related to the acquisition.

Requirement: Compute for the goodwill (negative goodwill) arising from the business combi
nation.

5. Cold Co. acquired 80% interest in the voting rights of Hot Co. for P800,000. The carryin
g amounts and fair values of Hot’s assets and liabilities on acquisition date are shown belo
w:

Carrying amount Fair Value

Cash 100,000 82,000
Inventory 650,000 500,000
Equipment 9,000,000 11,000,000
Goodwill 10,000 2,000
Accounts payable (60,000) (84,000)
Total 9,700,000 11,500,000

Hot Co. incurred acquisition-related costs of P50,000.

Requirements: Compute for the goodwill (negative goodwill) arising from the business comb
ination under the following assumptions:

a. NCI is measured at fair value. An independent consultant determined that the NCI’s fair
value at acquisition date is P202,000.
b. NC] is measured at fair value. No consultant was engaged through the NC]. However, C
old's managemem bdieves “Mt the NCI's fair value correlates “IQ mnSIdt‘TOHOI‘ mnsfem-d
on the business combination. c. NO is measured at its proportionate share in the nap... he
t assets. 6‘ Night Co. acquired Day Co. in a business combination. N'h Co. incurred the fo
llowing transaction costs on the W e Finder's fees 10m e Professional fees of consultants 5
0m ~ General administrative costs 30,0} o Registration costs of the debt and equity securiti
es issued 60,01 Requiremmt: How much of the acquisition-related costs list; above will be
expensed outright? 7. Happy Co. acquired Sad Co. in a business combination. Tb following
has been determined: 0 Included in Sad Co.'s recorded assets are the following a. Publish
ing title with carrying amount of mom: However, the fair value on acquisition date is only
P2000. b. Internally generated computer software with carrying amount of P1,000,000. The .
acquisition-date fair value of the software cannot be determined reliably becamt the softwar
e is deemed obsolete. 0 Sad Co. has ongoing research and development pmjeds Research
and development costs of ?80,000 were charged to expense. . Sad Co. has an unrecorde
d patent with fair value at f50,000. However, Happy Co. does not intend to use thié paten
t.