Use the following information for question 1
CPA Corporation purchased a 10% interest in Sticky Company on January 1, 2010 as an
available-for-sale investment for a price of P120,000.
On January 1, 2015, CPA Corporati
...
Use the following information for question 1
CPA Corporation purchased a 10% interest in Sticky Company on January 1, 2010 as an
available-for-sale investment for a price of P120,000.
On January 1, 2015, CPA Corporation purchases 7,000 additional shares of Sticky
Company from existing stockholders for P945,000. This purchase increased CPA interest
to 70%. Sticky Company had the following statement financial position just prior to CPA
second purchases:
___________________________________________________________________________
Assets Liabilities and Equity
___________________________________________________________________________
Current assets 495,000 Liabilities 195,000
Building (net) 420,000 Common stock, P30 par
300,000
Equipment (net) 300,000 Retained earnings 720,000
_______ ________
Total assets 1,215,000 Total liabilities and equity 1,215,000
On the date of the second purchase, CPA determines that the equipment of Sticky was
understated by P150,000 and had a 5-year remaining life. All other book values
approximate fair values. Any remaining excess is attributed to goodwill.
1. On January 1, 2015 consolidated statement of financial positon, what is
the amount of goodwill to be reported?
A. P180,000
B. P45,000
C. P75,000
D. P120,000
Use of the following information for questions 2 and 3
Penny Company owns an 80% controlling interest in the Money Company. Money
regularly sells merchandise to Penny, which then sold to outside parties. The gross point
on all such sales is 40%. On January 1, 2014, Penny sold land and a building to Money.
The value of the parcel is 20% to land, and 80% to structures. The pertinent data are the
following
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