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What is the implied goodwill from the acquisition

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Reference no: EM132978984

Question - On January 1, 2020, Labyu Company purchased 30% of the outstanding ordinary shares of Kiskita Company for P7,500,000 when the carrying amount of the net assets of Kiskita Company equaled P18,000,000. Equipment with remaining useful life of 5 years had a fair value that was P3,750,000 in excess of their carrying amount. The remaining difference between the purchase price and the carrying amount of the underlying equity cannot be attributed to any identifiable asset. Accordingly, the remaining difference is allocated to Goodwill.

During 2020, Kiskita Company reported net income of P6,000,000 and paid cash dividend of P1,500,000.

1. What is the implied goodwill from the acquisition?

a. P975,000 c. P1,125,000

b. P2,100,000 d. P1,425,000

2. What is the amount of investment income for 2020?

a. P1,380,000 c. P2,025,000

b. P1,575,000 d. P1,800,000

3. What is the carrying amount of the investment in associate on December 31, 2020?

a. P8,100,000 c. P8,850,000

b. P8,625,000 d. P7,500,000

Reference no: EM132978984

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