On January 1, 2021, Archie Co. acquired 80% of the equity interests of Aleman, Inc. in exchange for cash. Because the former owners of Aleman needed to dispose of their investments in Aleman by a specified date, they did not have sufficient time to market Aleman to multiple potential buyers. As of January 1, 2021, Aleman's identifiable assets and liabilities have fair values of ₱4,800,000 and ₱1,600,000, respectively. Archie Co. elects the option to measure non-controlling interest at fair value. A value of ₱1,000,000 is assigned to the 20% non-controlling interest in Aleman, Inc. [(₱4M ÷ 80%) x 20% = 1,000,000]. If Archie Co. paid ₱4,000,000 cash as consideration for the 80% interest in Aleman, Inc., how much is the goodwill (gain on bargain purchase) on the business combination?

a.1,800,000

 

 

b.1,440,000

 

 

c.200,000

 

 

d.2,440,000

Answer rating: 100% (QA)

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