Reference no: EM132675156

On January 1, 2018, Entity A acquired 30,000 out of 100,000 outstanding ordinary shares of Entity B for P90,000 or 30% interest. For the six months ended June 30, 2018, Entity B reported net income of P40,000.

• On July 1, 2018, Entity A acquired additional 60,000 ordinary shares of Entity B or 60% interest at a price of P4 per share or total cost of P240,000. Entity A paid P20,000 acquisition related costs and P10,000 indirect cost of business combination.
• The acquisition price per share of the additional shares clearly reflected the fair value of the existing interest of Entity A in Entity B. It is the policy of Entity A to initially measure the non-controlling interest in net assets of the acquiree at fair value. The fair value of the non-controlling interest in ne assets of the acquiree is reliably measured at P50,000.
• At the acquisition date, the net assets of Entity B were reported at P400,000. An asset of Entity B was overvalued by P50,000 while one liability was overvalued by P30,000.

Problem 1: What is the gain on remeasurement of the existing Investment in Entity B as a result of step acquisition