Reference no: EM132769785

Question - Entity A acquired 80,000 out of 100,000 outstanding shares of Entity B which enabled the former to obtain control of the latter at an acquisition price of 1,000,000. Entity A paid 100,000 acquisition related costs and 50,000 indirect costs of business combination.

At the date of acquisition, the net assets of Entity B are reported at 1,600,000. An asset of entity B is overvalued by 60,000 while one liability is undervalued at 40,000.

1. What is the initial measurement of noncontrolling interest in net assets in the consolidated statement of financial position?

a. 320,000

b. 300,000

c. 250,000

d. 316,000

2. What is the goodwill or gain on bargain purchase arising from business combination?

a. 250,000 gain on bargain purchase

b. 150,000 gain on bargain purchase

c. 50,000 goodwill

d. 200,000 gain on bargain purchase