What should be the amount of goodwill on January

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Question - Moss corporation acquired the net assets of Jolly Company on January 1, 2010 and made the following entry to record the acquisition: DR Current Assets P600,000DR. Equipment 900,000DR. Land 300,000DR. Building 1,800,000DR. Goodwill 600,000CR. Liabilities P480,000 CR. Common stock, P1 Par 600,000 CR. Additional paid in capital 3,120,000The agreement further provides that additional cash consideration would be paid on January 1, 2012, equal to twice the amount by which average earnings of Jolly Company exceed P100,000 per year, prior to January 1,2012. Net income was P200,000 in 2010 and P240,000 in 2011. Assume that the liabilities recorded in January 2010 included an estimated contingent consideration liability recorded at the estimated amount of P160,000, although it was assessed to be not probable at this date. What should be the amount of goodwill on January 1, 2012?

Reference no: EM132989022

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