How much is the goodwill

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Question - On January 1, 2021, ABC Co. acquired all of the identifiable assets and assumed all of the liabilities of XYZ, inc. by paying cash of P4,000,000. On this date, XYZ's identifiable assets and liabilities have fair values of P6,400,000 and P3,600,000, respectively. ABC agrees to pay an additional amount equal to 10% of the 20x1 year-end profit that exceeds P1,600,000. XYZ historically has reported profit of P1,200,000 to P1,600,000 each year. After assessing the expected level of profits for the year based on forecasts and plans, as well as industry trends, ABC estimated that the fair value of the contingent consideration is P40,000. How much is the goodwill (gain on bargain purchase)?

Reference no: EM133126543

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