Reference no: EM133141549
Question - LBN Inc. acquired 80% of AB Corp outstanding shares on January 1, 2022 by paying cash. The consolidated statement of financial position showed the following balances at the date of acquisition.
Consolidated Balances Amount
Total Assets 15,670,000
Total Liabilities 4,575,000
Total Shareholder's Equity ?
The book value of the net assets of AB Corp is P4,500,000. The assets of AB Corp are fairly valued except for the following:
Patent on the product that is deemed worthless, P50,000.
Goodwill of P150,000.
Unrecognized identifiable R&D of P75,000.
The fair value of the non-controlling interest is 705,000 and the book value of LBN's equity balance is P9,500,000.
On December 31, 2022 the following information were provided by AB Corp:
Net income of 400,000 was recognized.
Patents remaining useful life is 4 years.
Pre-existing goodwill presented above was impaired with a current value of 120,000.
Dividends were declared amounting to P100,000.
LBN Inc. recognized net income amounting to P650,000 on December 31, 2022.
How much is the consideration transferred?
a. 2,780,000
b. 2,765,000
c. 2,705,000
d. 2,950,000
How much is the goodwill or gain on bargain purchase?
a. 890,000 goodwill
b. 890,000 gain on bargain purchase
c. 720,000 goodwill
d. 720,000 gain on bargain purchase
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