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How much is the goodwill on the date of acquisition

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Question - Pavilion Corp. acquired an 80% interest from Smile Company on January 1, 2019 for P2,200,000 when the fair value of Smile Company's identifiable net assets was P2,000,000. Smile Company's equity accounts on date of acquisition were: Share Capital-P400,000; Share Premium-P300,000; and Retained Earnings-P900,000. The price difference between the carrying value and fair value of net assets is attributable to a non-current depreciable asset with 5 years remaining life. Out of P100,000 out of pocket cost, 20% represent indirect cost and the balance is direct cost. Both companies are classified as SMEs.

Required -

1. How much is the goodwill on the date of acquisition?

2. How much is the carrying value of goodwill on December 31, 2020?

Reference no: EM132855102

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