Reference no: EM133069983

Question - On January 1, 2022, Alpha Company acquired 100% control of Beta Company's shares for an amount which is P500,000 over the book value of interest acquired. On this date, the balance sheet of Alpha Company and Beta Company are as follows:

	Alpha Company	Beta Company
Assets
Cash	P7,500,000	P1,300,000
Accounts Receivable	1,700,000	450,000
Inventories	1,150,000	800,000
Equipment (net)	5,000,000	1,050,000
Patents	200,000	50,000
Total Assets	P15,550,000	P3,650,000
Liabilities & Equity
Accounts Payable	P600,000	P200,000
Notes Payable	2,000,000	-
Ordinary Share Capital	5,000,000	2,000,000
Ordinary Share Premium	6,750,000	600,000
Retained Earnings	1,200,000	850,000
Total Liabilities & Equity	P15,550,000	P3,650,000

The identifiable assets and liabilities of Beta Company are fairly valued except for inventories which is overvalued by P100,000 and equipment which is undervalued by P250,000. Business combination expenses incurred and paid by the acquirer: legal fees - P50,000 & finder's fee P30,000.

Required -

1. How much is the goodwill (or gain on acquisition)?

2. Journalized the transaction in the book of the acquirer.

3. Assuming the transaction is classified as "net asset acquisition" (acquiree was dissolved), journalized the transactions in the book of the acquirer.