Reference no: EM132787946
Question - Denim Co. merged into Kraft Corp. on July 1, 2013. In exchange for the net assets at fair market value of Denim Co. amounting to P696,450, Kraft issued 68,000 common shares at P9 par value with a market price of P12 per share.
Out of pocket costs of the combination were as follows:
Legal fees for the contract of business combination P35,600
Audit fee for SEC registration of stock issue 90,000
Printing costs of stock certificates 14,500
Broker's fee 23,600
Accountant's fee for pre-acquisition audit 80,000
Other direct cost of acquisition 75,000
General and allocated expenses 43,000
Listing fees in issuing new shares 36,000
Denim will pay an additional cash consideration of P455,000 in the event that Kraft's net income will be equal or greater than P950,000 for the period ended December 31, 2013. At acquisition date, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be P195,000.
Actual net income for the period ended December 31, 2013 amounted to P1,250,000. The additional cash consideration was paid.
What is the amount of goodwill to be recognized in the statement of financial position as of December 31, 2013?
a. P314,550
b. P308,500
c. P295,450
d. P326,550