Riki Co. acquires the entire share capital of Doom Co. by issuing 100,000 new P1 ordinary shares at a fair value at the acquisition date of P2.50. The professional fees associated with the acquisition are P20,000 and the issue costs of the shares are P10,000. The carrying value of the net assets of Doom Co. at the time of acquisition is P150,000, which is equal to its fair value.Other information related to the acquisition includes the following:

a) If Doom's profits for the first full year following acquisition exceed P2 million, Riki Co. will pay additional consideration of P6 million in cash three months after that year end. It is doubtful whether Doom Co. will achieve this profit, hence the acquisition-date fair value of this contingent consideration is P100,000.

What amount should Riki present for goodwill in its statement of financial position at December 31, 2011, according to IFRS3 Business combinations?

Answer rating: 100% (QA)

Answer To calculate the amount of goodwill that Riki Co should present in its statement of financial ... View the full answer