Reference no: EM133002587

On January 1, 2020, Allegre Co. acquired all of the assets and assumed all the liabilities of Contrabass Co. As of this date the carrying amounts and fair values of the assets and liabilities of Contrabass acquired by Allegre are shown below:

Assets                             Carrying Amounts                     Fair Values
Petty Cash Fund                   10,000                             10,000
Receivables                           200,000                        120,000
Allowance for Bad Debts   (30,000)
Inventory                               520,000                         350,000
Building, net                          1,000,000                      1,100,000
Goodwill                                   100,000                         20,000
Total Assets                            1,800,000                      1,600,000

Liabilities

Payables                                      400,000                        400,000

On the negotiation for the business combination, Allegre Co. incurred transaction costs amounting to P100,000 for legal, accounting and consultancy fees.

Problem 1: Prepare journal entries for the following situation:
a. Acquisition cost: P1,500,000
b. Acquisition cost: P1,000,000.