1. On January 1, 20x1, k lang. acquired 75% controlling interest in ok Co. for P1,000,000.

On this date, the fair

2. On January 1, 20x1, rainy Co. acquires 80% of the outstanding voting shares of Sunny Co. Sunny's
identifiable assets and liabilities have fair values of P3,400,000 and P1,700,000, respectively. Relevant
information follows:
 Rainy Co. agrees to pay Sunny's former owners ₱2,000,000 cash, half of which is to be paid on
January 1, 20x1, while the other half will be paid in five equal annual installments starting December 31,
20x1. The current market rate of interest on January 1, 20x1 is 12%.
 Rainy also agrees to provide a technical know-how to be used in Sunny's operations after the business
combination. The technical know-how has a fair value of ₽200,000.
 Rainy opt to measure the non controlling interest at the proportional share in sunny’s net identifiable
assets
a. How much is the goodwill (gain on bargain purchase)?

3. Silent Co. acquires 80% controlling interest in Peaceful Co. for ₽1,200,000. Peaceful Co.'s identifiable
assets and liabilities have fair values of P3,300,000 and P1,700,000, respectively.
Included in Peaceful's assets is a web press machine with fair value of ₽900,000 which Silent Co. intends to
sell immediately.
The machine qualifies for classification as 'held for sale'. The costs to sell are ₽150,000. Silent Co. opts to
measure the non-controlling interest at fair value.
 Assume the fair value of the NCI is equal to the grossed-up value of the consideration transferred multiplied
by the NCI percentage.
a. How much is the goodwill (gain on bargain purchase)?

4. Morning Co. acquires 100% controlling interest in Wood Co. by issuing 2,000 shares with par value per
share of P100 and fair value per share of P500. Morning Co. incurs stock issuance costs of P10 per share.
On acquisition date, Wood Co's identifiable assets and liabilities have fair values of P2,800,000 and
P1,600,000, respectively. Morning Co.incurred P40,000 in hiring an independent appraiser to value Wood's
assets and liabilities. After the combination, morning intends to eliminate some of Wood's activities. The
estimated costs are ₽20,000. In addition, morning Co. expects to incur losses of P80,000 during the first
year after the business combination. How much is the goodwill (gain on bargain purchase)?

5. Mason Co. acquired all the assets and liabilities of Hammer Co. for P2,600,000. On acquisition date,
Hammer's identifiable assets and liabilities have fair values of ₽5,900,000 and ₽3,500,000, respectively.
Relevant information follows:
 Mason is renting out a building to Hammer Co. on an operating lease. The terms of the lease compared
with market terms are favorable. The fair value of the differential is ₽90,000
 Hammer is a defendant on a pending lawsuit. No provision was recognized because Hammer's legal
counsel believes they will successfully defend the case. The fair value of settling the lawsuit is ₽10,000.
a. How much is the goodwill (gain on bargain purchase)?

6. On January 1, 20x1, Creek Co. acquired all the assets and assumed all the liabilities of Bamboo Co. for
₽2,400,000.
Relevant information follows:
Assets Carrying amount Fair value
Cash ₱10,000 10,000
Receivables, net 400,000 280,000
Inventory 480,000 350,000
Land 2,000,000 2,200,000
Goodwill 110,000 20,000
Total assets 3,000,000 2,860,000
Liability 400,000 480,000
Payable
 Bamboo Co. has research and development projects with fair value of ₽60,000. Creek Co. does not intend to
use those R&Ds.
However, there have been exchange transactions involving the information generated from Bamboo's R&D, but
those transactions are infrequent.
 All fair value adjustments result to temporary differences but do not affect the tax bases of the assets and
liabilities. The tax rate is 30%.
 Creek incurred P100,000 on general administrative costs of maintaining an internal acquisitions department.
How much is the goodwill (gain on bargain purchase)?

7. A Co. acquired 80% interest in B Co. for P1,200,000. On acquisition date, B's identifiable assets and
liabilities have fair values o P1,700,000 and P400,000, respectively.
a. How much is the goodwill if A Co. opts to measure the non-controlling interest at the NCI's proportionate
share in B Co!'s net identifiable assets?
b. How much is the goodwill if A Co. opts to measure the non-controlling interest at fair value? (An independent
appraiser valued the NCI at ₽300,000.

8. A Co. acquired all the assets and liabilities of B Co. by issuing 10,000 shares with par value of P20 per
share and fair value of P100 per share. A Co. incurred P40,000 in issuing the shares and P60,000 in
professional fees and administrative costs in effecting the business combination. On acquisition date, B's
identifiable assets and liabilities have fair values of P1,800,000 and P900,000, respectively. After the
business combination, A Co. will close some of the operating segments of B Co. The closure costs are
estimated at ₽400,000.
a. Compute for the goodwill(gain on bargain)

9. A Co. acquired 60% interest in the net assets of B Co. for ₽1,500,000. On acquisition date, B Co.'s
identifiable assets and liabilities have fair values of ₽5,000,000 and ₽2,800,000, respectively.
 Additional information:
o B Co. has an unrecorded customer list with fair value of ₽80,000. The customer list is separable.
o A Co. is renting out a license to B Co. under an operating lease. The terms of the lease compared
with market terms are unfavorable. The fair value of the differential is ₽30,000.
o A Co. opted to measure the NCI at fair value. An independent valuer assessed the fair value of the
NCI to be ₽800,000.
a. Requirement: Compute for the goodwill.

10. On November 1 2023, Dawnja Co. Acquired all identifiable assets and liabilities of MAMA Co. For P4,500,500
 Information on acquisition date
o MAMA Co. Net Identifiable assets were valued at P4,250,500. This amount included a provisional amount of
P550,000 assigned to a specialised machine for which the fair value is not readily determined. Dawnja Co.
tentatively depreciated the machine over 6 years using the straight-line method in 2023
 information after the acquisition date
o On March 01 2024 an independent consultant determined that the machine’s fair value on acquisition date
was P850,000 and the premaining useful life as of that date was 4 years
o On August 01 2024, the stock market crashed. Various held for trading securities acquired from MAMA Co.
With acquisition date fair value of P500,000 now have a fair value of only P75,000
 Requirement.
o How much is the goodwill or gain on bargain on the acquisition date?
o How much is the goodwill or gain on bargain after the acquisition date?