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Determine the amount of fair value adjustment and goodwill

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Reference no: EM132904224

The Double Company acquired the share capital of Solo Co. for 80% on July 1, 20x1 for P800,000 which represented the fair value of the consideration transferred.

The following are the financial data of Solo Co.:

Issued capital-P600,000
Revaluation surplus-P200,000
Retained earnings-P200,000
Total Owner's equity-P1,000,000

Problem 1: All assets of Solo were recorded at fair value at acquisition date except for equipment that had a fair value of P40,000 greater than its carrying amount. This gives rise to the recognition of deferred tax liability. The cost of the equipment was P80,000 and it had accumulated depreciation of P20,000. The tax rate is 30%. Using the proportionate method, determine the amount of fair value adjustment and goodwill, respectively, on July 1, 20x1.

Reference no: EM132904224

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