Reference no: EM132942622
Questions -
Q1) Guava Company, a major winery, started a construction of a new facility in Mindanao. The following costs are incurred in conjunction with the startup activities of the new facility:
Production equipment 8,150,000
Travel costs of salaried employees 400,000
License fee 140,000
Training of local employees for production and maintenance operations 1,200,000
Advertising costs 850,000
What portion of the organization costs will be expensed?
a) P1,390,000
b) P1,600,000
c) P2,450,000
d) P2,590,000
e) answer not given
Q2) Kiwi Co. purchased another entity for P5,000,000 cash. The carrying amount and fair value were associated with this acquisition:
Carrying amount Fair value
Accounts receivable 2,000,000 2,000,000
Inventory 1,000,000 500,000
Government contract 1,000,000
Equipment 400,000 500,000
Short-term loan payable (2,000,000) (2,000,000)
Net assets 1,400,000 20,000,000
The fair value associated with the acquired entity's government contract is not based on any legal or contractual relationship. In addition, for obvious reason, there is no open market trading for an intangible of this sort. What is the goodwill arising from the acquisition?
a) P0
b) P3,000,000
c) P3,600,000
d) P4,000,000
e) answer not given