On January 1, 2021 CCC acquired all of the identifiable assets and assumed all liabilities of DDD by paying P4,800,000. On this date, identifiable assets and liabilities assumed have fair value of P7,680,000 and P4,320,000, respectively. Terms of agreement are as follows: 20% of the price shall be paid on January 1, 2021 and the balance on December 31, 2022 (the prevailing market rate on the same date 10%) The acquirer shall also transfer its piece of land with book value and fair value of P2,400,000 and P1,440,000, respectively. Included in the liabilities assumed is an estimated warranty liability. The carrying amount and fair value of this warranty liability amounted to P576,000 and P468,000, respectively. The acquiree guarantees that the warranty liability would only be settled for P480,000. How much is the goodwill on the business combination?

On January 1, 2021 CCC acquired all of the identifiable assets and assumed all liabilities of DDD by paying P4,800,000. On this date, identifiable assets and liabilities assumed have fair value of P7,680,000 and P4,320,000, respectively. Terms of agreement are as follows: 20% of the price shall be paid on January 1, 2021 and the balance on December 31, 2022 (the prevailing market rate on the same date 10%) The acquirer shall also transfer its piece of land with book value and fair value of P2,400,000 and P1,440,000, respectively. Included in the liabilities assumed is an estimated warranty liability. The carrying amount and fair value of this warranty liability amounted to P576,000 and P468,000, respectively. The acquiree guarantees that the warranty liability would only be settled for P480,000. How much is the goodwill on the business combination?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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January 1, 2021 CCC acquired all of the identifiable assets and assumed all liabilities of DDD by paying P4,800,000. On this date, identifiable assets and liabilities assumed have fair value of P7,680,000 and P4,320,000, respectively. Terms of agreement are as follows: 20% of the price shall be paid on January 1, 2021 and the balance on December 31, 2022 (the prevailing market rate on the same date 10%) The acquirer shall also transfer its piece of land with book value and fair value of P2,400,000 and P1,440,000, respectively. Included in the liabilities assumed is an estimated warranty liability. The carrying amount and fair value of this warranty liability amounted to P576,000 and P468,000, respectively. The acquiree guarantees that the warranty liability would only be settled for P480,000. How much is the goodwill on the business combination?
Bruno Mars Company enters into a contract with John Legend to deliver Products X and Y in exchange for a non- interest bearing note with a face value of P192,685.38, on January 1, 2020. Product X will be delivered in December 31, 2021 and Product Y in December 31, 2024. Upon delivery of product X, Bruno Mars will receive P42,135 and the remaining P150,550.38 will be received upon delivery of Product Y. The contract is non-cancellable. Bruno normally sells Product X at P43,750 cash price equivalent while Product Y can be sold at P131,250. Nonetheless, due to the nature of the bundled purchase, John Legend is given a favorable pricing. A financing rate of 6% is appropriate based on Bruno’s credit-standing at contract inception. Bruno uses December 31 as its year end. How much total revenue can Bruno report in its December 31, 2021 income statement? How much total revenue can Bruno report in its December 31, 2024 income statement?
. On December 31, 2020, SSNIT and SIC (non-life) entered into a six year swap arrangement with first payment to be exchanged on December 31st, 2022 and each December 31st thereafter under the following terms: SIC will pay SSNIT an amount equals to 5% per annum on a notional principal of US$50 million. (FIXED Amount) SSNIT will pay SIC an amount equals to one-year LIBOR +1.25% per annum on a notional amount of US$50 million. (Flexible Amount). On 31stDecember 2022, one-year LIBOR is projected to be 2.75%. What will be the payment flows for the first year, December 31st?
On January 1, 2021, an entity purchased marketable equity securities for P5,000,000. The equity securities qualify as a financial asset held for trading. The entity also paid P50,000 as commission to the broker. At year-end, the trading securities have a fair value of P6,000,000. The increase in fair value should be recorded with: a.A credit to Financial asset - FVPL, P1,000,000 b.A debit to Unrealized gain - OCI, P1,000,000 c.A debit to Financial asset - FVPL, P1,000,000 d.A debit to Unrealized gain - P/L, P1,000,000
During 2018, the entity billed the customer equivalent to 30% of the contract price. During 2019, the entity billed again the customer amounting to 20% of the contract price. During 2020, the entity billed again the customer amounting to 40% of the contract price. The remaining billing was made at the year of completion of the project. The entity made collection from the customer at the end of 2018, 2019 and 2020, in the amount of P120,000, P450,000 and P180,000, respectively. The entity provided the following data concerning the direct costs related to the said project: 2020 2018 2019 Cumulative costs incurred at year-end 360,000 800,000 870,000 Remaining estimated costs to complete at year- 840,000 250,000 50,000 end What is the realized gross profit for the year ended December 31, 2019? Group of answer choices 50,000 150,000 200,000
On September 1, 2020, SMD Company borrowed P5,000,000, 10%interest-bearing note due in five years. On December 31, 2020, the fairvalue of the note is determined to be P4,350,000. The entity electedirrevocably the fair value option in measuring the note payable. Whatamount of gain/loss from change in fair value of the note payable shouldbe reported for 2020? A. P1,250,000 gainB. P1,250,000 lossC. P650,000 gainD. P650,000 loss
1. On December 31, 2020, Rice, Inc. authorized Graft to operate as a franchisee for an initial franchise fee of P150,000. Of this amount, P60,000 was received upon signing of the agreement and the balance, represented by a note, is due in three annual payments of P30,000 each beginning December 31, 2021. The present value on December 31,2020 of the three annual payments appropriately discounted is P72,000. According to the agreement, the non- refundable down payment represents a fair measure of the services already performed by Rice; however, substantial future services are required of Rice. Collectability of the note is reasonably certain. a. in Rice’s December 31, 2020 balance sheet, unearned franchise fees from Graft’s franchise should be reported as?
1. On December 31, 2020, Rice, Inc. authorized Graft to operate as a franchisee for an initial franchise fee of P150,000. Of this amount, P60,000 was received upon signing of the agreement and the balance, represented by a note, is due in three annual payments of P30,000 each beginning December 31, 2021. The present value on December 31,2020 of the three annual payments appropriately discounted is P72,000. According to the agreement, the non-refundable down payment represents a fair measure of the services already performed by Rice; however, substantial future services are required of Rice. Collectability of the note is reasonably certain. a. in Rice’s December 31, 2020 balance sheet, unearned franchise fees from Graft’s franchise should be reported as? 2. Levi and Zeke agreed on a joint venture to purchase and sell car accessories. Their contract stipulates that the participants shall contribute P25,000 each to be used in purchasing the merchandise, share equally in any gain or…
On Jan. 1, 2020, the entity started the preparation of its buildingconstruction. On the same date, it specifically acquired a loan forthe construction. The entity spent P3,000,000 on Jan. 1, 2020 and P5,000,000 on Mar.31, 2021. The loan has a principal amount of P10,000,000, interest of 5% dueevery Jan. 1, maturity date of Jan. 1, 2023, net proceeds ofP9,732,700, and an effective interest rate of 6%. While not yet paidout for the construction, the amount borrowed was temporarilyinvested. Investment income for the two years totaled P480,000. 5. How much is the total capitalizable cost as of Dec. 31, 2021?
A Corp. leased equipment to a lessee on January 1, 2021. The lease is for an eight-year period expiring on December 31, 2028. The first of eight equal annual payments of P900,000 was made on January 1, 2021 and subsequent payments will be made every January 1 thereafter. A Corp. had purchased the equipment on December 29, 2020 for P4,800,000. A Corp. paid P150,000 in connection with negotiating and arranging the lease. The lease is appropriately accounted for as a dealer’s lease by A Corp.. The present value on January 1, 2021 of all rent payments over the lease term discounted at a 10% interest rate was P5,280,000.How much is the Cost of Sales to be recognized in 2021? How much is the Interest Revenue in 2021? How much is the Net Investment in the Lease at December 31, 2022?
MISTLETOE Company is a dealer in equipment. The entity leased equipment to a lessee on January 1, 2021 for an eight-year period expiring January 1, 2029. Equal annual payments under the lease are due at the end of each year beginning December 31, 2021. The lease agreement included a guaranteed residual value of P200,000 and an implicit rate of 10%. It was determined that the fair value of the asset is P3,000,000. The carrying amount is P2,500,000 and that the present value of the minimum lease payment at 10% is P2,760,900. The PV of 1 at 10% for 8 periods is 0.467, and the PV of an ordinary annuity of 1 at 10% for 8 periods is 5.335. HOW MUCH IS THE GROSS INVESTMENT THAT SHOULD BE INITIALLY RECOGNIZED AS LEASE RECEIVABLE? A. 4,000,000 B. 3,840,150 C. 3,000,000 D. 4,140,056
At December 31, 2021, ABC Company has an outstanding purchase commitment with contract purchase price of P 1,000,000 and the market value on this date is P 950,000 which is different from the expected market value of P 990,000. QUESTION: What is the amount of Loss on Purchase Commitment to be recorded at December 31, 2021?