On January 1, 2019, Fortitude Co. acquired 30% ownership interest in ENDURANCE, Inc. for P400,000. Because the
Question:
On January 1, 2019, Fortitude Co. acquired 30% ownership interest in ENDURANCE, Inc. for P400,000. Because the investment gave the former significant influence over the latter, the investment was accounted for under equity method.
Two years after the acquisition, FORTITUDE Co. recognized P200,000 net share in the profits of the associate and P40,000 share in dividends. At the start of third year (January 2022), FORTITUDE Co. acquired additional shares of 60% in ENDURANCE, Inc. for P3,200,000 and identified that:
a. The previously held 30% interest has a fair value of P720,000.
b. ENDURANCE'S net identifiable assets have a fair value of P4,000,000.
c. FORTITUDE Co. elected to measure the non-controlling interest at the non-controlling interest’s proportionate share of ENDURANCE’s identifiable asset.
Compute for the goodwill and show solution in the above case and provide for the journal entries to record the mentioned transactions.
