Reference no: EM132932979
Questions -
Q1. The Double Company acquired the share capital of Solo Co. for 80% on July 1, 20x1 for P800,000 which represented the fair value of the consideration transferred.
The following are the financial data of Solo Co.:
Issued capital-P600,000
Revaluation surplus-P200,000
Retained earnings-P200,000
Total Owner's equity-P1,000,000
All assets of Solo were recorded at fair value at acquisition date except for equipment that had a fair value of P40,000 greater than its carrying amount. This gives rise to the recognition of deferred tax liability. The cost of the equipment was P80,000 and it had accumulated depreciation of P20,000. The tax rate is 30%. Using the proportionate method, determine the amount of fair value adjustment and goodwill, respectively, on July 1, 20x1.
Q2. Porta Company acquires all of the outstanding stock of Vaga Co. on January 1, 2016. At that date, Vaga owns the ff. assets without liabilities:
|
|
BOOK VALUE
|
FAIR VALUE
|
|
Inventory
|
40,000
|
50,000
|
|
Equipment (10 year life)
|
80,000
|
75,000
|
|
Building (20 year life)
|
200,000
|
300,000
|
If Porta paid P450,000 in cash for Vaga, what amount would be represented as the subsidiary's Building in a consolidation at December 31, 2018 assuming the book value at that date is still P200,000?