On January 1, 2021, OBDURATE Co. acquired 30% ownership interest in STUBBORN, Inc. for $200,000. Because...

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On January 1, 2021, OBDURATE Co. acquired 30% ownership interest in STUBBORN, Inc. for $200,000. Because the investment gave OBDURATE significant influence over STUBBORN, the investment was accounted for under the equity method in accordance with PAS 28. From 2021 to the end of 20x3, OBDURATE recognized #100,000 net share in the profits of the associate and $20,000 share in dividends. Therefore, the carrying amount of the investment in associate account on January 1, 20x3, is P280,000. On January 1, 20x4, OBDURATE acquired additional 60% ownership interest in STUBBORN, Inc. for P1,600,000. As of this date, OBDURATE has identified the following: a. The previously held 30% interest has a fair value of P360,000. b. STUBBORN's net identifiable assets have a fair value of $2,000,000. C. OBDURATE elected to measure non-controlling interests at the non-controlling interest's proportionate share of STUBBORN's identifiable net assets. Requirement: Compute for the goodwill. On January 1, 2021, OBDURATE Co. acquired 30% ownership interest in STUBBORN, Inc. for $200,000. Because the investment gave OBDURATE significant influence over STUBBORN, the investment was accounted for under the equity method in accordance with PAS 28. From 2021 to the end of 20x3, OBDURATE recognized #100,000 net share in the profits of the associate and $20,000 share in dividends. Therefore, the carrying amount of the investment in associate account on January 1, 20x3, is P280,000. On January 1, 20x4, OBDURATE acquired additional 60% ownership interest in STUBBORN, Inc. for P1,600,000. As of this date, OBDURATE has identified the following: a. The previously held 30% interest has a fair value of P360,000. b. STUBBORN's net identifiable assets have a fair value of $2,000,000. C. OBDURATE elected to measure non-controlling interests at the non-controlling interest's proportionate share of STUBBORN's identifiable net assets. Requirement: Compute for the goodwill.

Answer rating: 100% (QA)

Answer Step 1 i Acquisition is a process where a company purchases most or all the shares of another ... View the full answer