To accomplish its objective, PFRS 3 establishes principles and

requirements for how the acquirer (choose the incorrect one):Required

to answer. Single choice.
(0/1 Point)
All choices are correct.
recognizes and measures in its financial statements the identifiable assets acquired,
the liabilities assumed and any non-controlling interest in the acquire.
determines what information to disclose to enable users of the financial statements
to evaluate the nature and nonfinancial effects of the business combination.
recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase.
5.An entity shall determine whether a transaction or other event is a
business combination by applying the definition in PFRS 3, which
requires that:Required to answer. Single choice.
(1/1 Point)
all of the combining entities transfer their net assets, or the owners of those entities
transfer their equity interests, to a newly formed entity
a group of former owners of one of the combining entities obtains control of the
combined entity.
the assets acquired and liabilities assumed constitute a business.
all of the combining entities or businesses are ultimately controlled by the same
party or parties both before and after the business combination.
6.The acquirer shall identify the acquisition date, which is the date on
which it obtains control of the acquiree. Which of the following is
incorrect?Required to answer. Single choice.
(0/1 Point)
The date on which the acquirer obtains control of the acquiree is generally the date
on which the acquirer legally transfers the consideration, acquires the assets and
assumes the liabilities of the acquiree—the closing date.
None of the above.
An acquirer shall consider all pertinent facts and circumstances in identifying the
acquisition date.
The acquirer might obtain control on a date that is either earlier or later than the
closing date.
7.As of the acquisition date, the acquirer shall recognize, separately
from goodwill, the identifiable assets acquired, the liabilities assumed
and any non-controlling interest in the acquiree. Recognition of
identifiable assets acquired and liabilities assumed is subject to the
following conditions:Required to answer. Single choice.
(1/1 Point)
 Must meet the definitions of assets and liabilities in the Framework for the
Preparation and Presentation of Financial Statements at the acquisition date.
Must be part of what the acquirer and the acquiree (or its former owners)
exchanged in the business combination transaction rather than the result of separate
transactions.
The acquirer's application of the recognition principle and conditions may result in
recognizing some assets and liabilities that the acquiree had not previously recognized
as assets and liabilities in its financial statements.
All of the above.
8.Which of the following should be covered by the recognition and
measurement principles under PFRS 3:Required to answer. Single
choice.
(1/1 Point)
Employee benefits
Share-based payment transactions
Assets held for sale
None of the above.
9.Statement 1: In a business combination achieved in stages, the
acquirer shall remeasure its previously held equity interest in the
acquiree at its acquisition-date fair value and recognize the resulting
gain or loss, if any, in other comprehensive income. Statement 2: In
prior reporting periods, the amount that was recognized in other
comprehensive income shall be recognized on the same basis as would
be required if the acquirer had disposed directly of the previously held
equity interest.Required to answer. Single choice.
(0/1 Point)
True, True
True, False
False, False
False, True
10.An investor controls an investee if and only if the investor has all
the following (choose the incorrect one):Required to answer. Single
choice.
(0/1 Point)
power over the investee
exposure, or rights, to variable returns from its involvement with the investee
majority voting rights over the investee
 the ability to use its power over the investee to affect the amount of the investor's
returns
11.Statement 1: A parent shall prepare consolidated financial
statements using uniform accounting policies for new transactions and
other events in similar circumstances. Statement 2: Consolidation of an
investee shall begin from the date the investor obtains control of the
investee and cease when the investor loses equity interests of the
investee.Required to answer. Single choice.
(0/1 Point)
False, True
False, False
True, False
True, True
12.If a parent loses control of a subsidiary, the parent (choose the
incorrect one):Required to answer. Single choice.
(1/1 Point)
recognizes the gain or loss associated with the loss of control attributable to the
former controlling interest.
None of the above.
recognizes any investment retained in the former subsidiary at its fair value when
control is lost and subsequently accounts for it and for any amounts owed by or to the
former subsidiary in accordance with relevant PFRSs.
derecognizes the assets and liabilities of the former subsidiary from the
consolidated statement of financial position.
13.Which of the following is incorrect pertaining to investment entities?
Required to answer. Single choice.
(1/1 Point)
An investment entity shall not consolidate its subsidiaries or apply PFRS 3 when it
obtains control of another entity. Instead, an investment entity shall measure an
investment in a subsidiary at fair value through profit or loss.
If an investment entity has a subsidiary that provides services that relate to the
investment entity's investment activities, it need not consolidate that subsidiary.
A parent of an investment entity shall consolidate all entities that it controls,
including those controlled through an investment entity subsidiary, unless the parent
itself is an investment entity.
A parent that either ceases to be an investment entity or becomes an investment
entity shall account for the change in its status prospectively from the date at which the
change in status occurred.
14.[Question 1/3] Pinas Corp issued 200,000 shares of its P10 par value
ordinary stock on March 31, 2019, to acquire all of the outstanding P25
par value ordinary stock of Suki Inc. Pinas Corp paid P10,000 for
printing and registering new shares of stocks. On March 31, 2019, the
market price of Pinas ordinary stock was P35 per share. Both
corporations continue to operate as separate businesses. On March 31,
2019, immediately before combination, the stockholders’ equities
were: Pinas Corp Suki Inc Ordinary stock P5,500,000 P2,500,000
Additional paid-in capital 4,200,000 470,000 Retained earnings
7,360,000 2,240,000 Additional information: - On March 10, 2019, Suki
Inc paid a cash dividend totaling P250,000 on its ordinary stock. - On
November 15, 2019, Pinas paid a cash dividend totaling P1.5M on its
ordinary stock. - Suki’s 2019 net income was P1,450,000. Pinas 2019
net income was P2,240,000, before considering equity in Suki’s net
income. - The balance in retained earnings at December 31, 2019,
were P6,820,000 and P2,290,000 for Pinas and Suki, respectively.
Determine the net income of Suki from April 1 to December 31, 2019 in
its separate financial statements.Required to answer. Single line text.
(0/2 Points)

Correct answers: 50000

15.[Question 2/3] Pinas Corp issued 200,000 shares of its P10 par value
ordinary stock on March 31, 2019, to acquire all of the outstanding P25
par value ordinary stock of Suki Inc. Pinas Corp paid P10,000 for
printing and registering new shares of stocks. On March 31, 2019, the
market price of Pinas ordinary stock was P35 per share. Both
corporations continue to operate as separate businesses. On March 31,
2019, immediately before combination, the stockholders’ equities
were: Pinas Corp Suki Inc Ordinary stock P5,500,000 P2,500,000
Additional paid-in capital 4,200,000 470,000 Retained earnings
7,360,000 2,240,000 Additional information: - On March 10, 2019, Suki
Inc paid a cash dividend totaling P250,000 on its ordinary stock. - On
November 15, 2019, Pinas paid a cash dividend totaling P1.5M on its
ordinary stock. - Suki’s 2019 net income was P1,450,000. Pinas 2019
net income was P2,240,000, before considering equity in Suki’s net
income. - The balance in retained earnings at December 31, 2019,
were P6,820,000 and P2,290,000 for Pinas and Suki, respectively.
Determine the consolidated net income for the year ending December
31, 2019.Required to answer. Single line text.
(0/2 Points)

Correct answers: 2290000

16.[Question 3/3] Pinas Corp issued 200,000 shares of its P10 par value
ordinary stock on March 31, 2019, to acquire all of the outstanding P25
par value ordinary stock of Suki Inc. Pinas Corp paid P10,000 for
printing and registering new shares of stocks. On March 31, 2019, the
market price of Pinas ordinary stock was P35 per share. Both
corporations continue to operate as separate businesses. On March 31,
2019, immediately before combination, the stockholders’ equities
were: Pinas Corp Suki Inc Ordinary stock P5,500,000 P2,500,000
Additional paid-in capital 4,200,000 470,000 Retained earnings
7,360,000 2,240,000 Additional information: - On March 10, 2019, Suki
Inc paid a cash dividend totaling P250,000 on its ordinary stock. - On
November 15, 2019, Pinas paid a cash dividend totaling P1.5M on its
ordinary stock. - Suki’s 2019 net income was P1,450,000. Pinas 2019
net income was P2,240,000, before considering equity in Suki’s net
income. - The balance in retained earnings at December 31, 2019,
were P6,820,000 and P2,290,000 for Pinas and Suki, respectively.
Determine the balance of investment account as of December 31,
2019.Required to answer. Single line text.
(2/2 Points)

17.[Question 1/2] Pete Corporation and Sol Company agreed to

combine their businesses, with Pete Corporation as the surviving entity.
Pete will issue 48,000 shares of its capital stock, with a par value of
P100 per share, and a fair market value of P175 per share. Pete
incurred the following additional acquisition cost: Professional Fees
P120,000 Indirect acquisition costs 80,000 Cost to Register and issue
stock 50,000 Before combination, their respective balance sheets
showed stock holders equity account as follow: Pete Sol Capital stock
P7,200,000 P3,600,000 Additional paid in capital 3,120,000 360,000
Retained earnings 6,000,000 2,040,000 Determine the amount of
Goodwill (Gain on Bargain Purchase).Required to answer. Single line
text.
(2/2 Points)

18.[Question 2/2] Pete Corporation and Sol Company agreed to

combine their businesses, with Pete Corporation as the surviving entity.
Pete will issue 48,000 shares of its capital stock, with a par value of
P100 per share, and a fair market value of P175 per share. Pete
incurred the following additional acquisition cost: Professional Fees
P120,000 Indirect acquisition costs 80,000 Cost to Register and issue
stock 50,000 Before combination, their respective balance sheets
showed stock holders equity account as follow: Pete Sol Capital stock
P7,200,000 P3,600,000 Additional paid in capital 3,120,000 360,000
Retained earnings 6,000,000 2,040,000 Determine the amount of
consolidated shareholders' equity immediately after business
combination.Required to answer. Single line text.
(0/2 Points)

Correct answers: 24470000

19.Rock Corporation was merged into Horse Company in a combination
properly accounted for as a purchase of interests. Their condensed
balance sheets before the combination are: Rock Horse Current assets
P3,288,000 P1,627,600 Property and equipment, net 4,654,000
1,040,000 Patents -0- 260,000 Total assets P7,942,000 P2,927,600
Liabilities P3,704,000 P171,600 Capital stock, par P100 2,600,000
1,300,000 Additional paid in capital 390,000 350,000 Retained
earnings 1,248,000 1,106,000 Total liabilities and equity P7,942,000
P2,927,600 Per appraisal’s report, Horse assets have fair values of:
Current assets P1,653,600 Property and equipment 1,248,000 Patents
338,000 Rook Corporation purchases the net assets of horse for
P3,168,000 cash. What is the total asset of Rook Corporation after the
combination?Required to answer. Single line text.
(0/2 Points)

Correct answers: 8113600

20.Red Corporation will issue common shares with a par value P10 for
the net assets of Blue Company. Red common stock has current market
value of P40 per share. Blue Balance sheet on the Date of acquisition
follow: Current assets P320,000 Property and equipment 880,000
Liabilities 400,000 Common stock, P5 par 800,000 Additional paid in
capital 320,000 Retained earnings 480,000 Blue’s current assets are
appraised at P400,000 and the property and equipment was also
appraised at P1,600,000. Its liabilities are fairly valued. Accordingly,
Red Corporation issued shares of its common stock with a total market
value equal to that of Blue’s net assets including goodwill. To recognize
goodwill of P200,000, how many shares were to be issued by Red?
Required to answer. Single line text.
(2/2 Points)

21.The stockholder’s equities of Par Corporation and Son Company at

July 1, 2019 were as follows: Par Son Capital stock, P100 par
P15,000,000 P8,000,000 Additional paid in capital 2,000,000 4,000,000
Retained earnings 6,000,000 3,000,000 On July 2, 2019, par issued
150,000 of its shares with a market value of P120 per share for the
assets and liabilities of Son, and Son was dissolved. On the same day,
Par paid P50,000 for indirect cost and P100,000 for SEC registration of
equity securities. After the combination, what is the total stockholders’
equity of Par Corporation?Required to answer. Single line text.
(2/2 Points)

22.On June 30, 2019, White Corporation issued 100,000 shares of its
P20 par value common stock for the net assets of Black Company in a
combination accounted for by the acquisition method. The market
value of White’s common stock on June 30 was P36 per Share. White
paid a fee of 100,000 to the Broker who arranged this acquisition. Cost
of SEC registration and issuance of the equity securities amounted to
P50,000. Contingent consideration determined to be paid after
acquisition amounts to P20,000. What amount should White capitalize
as the cost of acquiring Black’s net assets?Required to answer. Single
line text.
(0/2 Points)

Correct answers: 3620000

23.On April 1, 2019, Queen Corporation paid P800,000 for the assets
and liabilities of Jack Company in a transaction properly accounted for
as a purchase. The book value of the assets and liabilities of Jack
Company on April 1, 2019, follow: Cash P80,000 Inventory 240,000
Plant and equipment (net of accumulated depreciation of P320,000)
500,000 Liabilities 180,000 On April 1, 2019, it was determined that
the inventory of Jack had a fair value of P190,000 and the plant and
equipment (net) had a fair value of P560,000. What is the amount of
goodwill resulting from the business combination?Required to answer.
Single line text.
(2/2 Points)

24.[Question 1/3] On January 1, 2019, P Company acquired 15,000

shares of S1 Company for P130 per share. P Company accounted for S1
shares as investment in associate applying the equity method. Share in
net income and any gain/loss on disposal is recognized in profit or loss
under “Investment income (loss)” account. On April 1, 2019, P
Company acquired an additional 120,000 shares of S1 Company for
P125. It was determined that the acquisition price included a P5 per
share control premium. P Company paid P80,000 for direct costs and
P40,000 for indirect costs. P Company also agreed to pay P500,000 if
the average annual net income of S Company for the next five years
will exceed P800,000. The fair value of the contingent consideration is
P200,000. NCI is recorded at its proportionate share in the net assets.
Financial information as of March 31, 2019 as follows: Debit: P
Company S1 Company Cash P17,250,000 P260,000 Accounts
receivable 1,700,000 1,065,000 Inventory 2,800,000 1,500,000 Land
and building – net 3,500,000 2,000,000 Property, plant & equipment –
net 4,585,000 5,250,000 Investment in associate (S1) 1,915,000 -0-
Cost of sales 1,500,000 400,000 Operating expenses 1,500,000
200,000 Credit: Current liabilities P1,250,000 P1,000,000 Mortgage
loan 4,000,000 500,000 Common stock, P50 par 20,000,000 7,500,000
Share premium 3,700,000 500,000 Retained earnings 1,800,000
175,000 Sales 3,960,000 1,000,000 Investment income 40,000 -0-
Determine the cost of investment in the books of P Company.Required
to answer. Single line text.
(0/2 Points)

Correct answers: 17000000

25.[Question 2/3] On January 1, 2019, P Company acquired 15,000
shares of S1 Company for P130 per share. P Company accounted for S1
shares as investment in associate applying the equity method. Share in
net income and any gain/loss on disposal is recognized in profit or loss
under “Investment income (loss)” account. On April 1, 2019, P
Company acquired an additional 120,000 shares of S1 Company for
P125. It was determined that the acquisition price included a P5 per
share control premium. P Company paid P80,000 for direct costs and
P40,000 for indirect costs. P Company also agreed to pay P500,000 if
the average annual net income of S Company for the next five years
will exceed P800,000. The fair value of the contingent consideration is
P200,000. NCI is recorded at its proportionate share in the net assets.
Financial information as of March 31, 2019 as follows: Debit: P
Company S1 Company Cash P17,250,000 P260,000 Accounts
receivable 1,700,000 1,065,000 Inventory 2,800,000 1,500,000 Land
and building – net 3,500,000 2,000,000 Property, plant & equipment –
net 4,585,000 5,250,000 Investment in associate (S1) 1,915,000 -0-
Cost of sales 1,500,000 400,000 Operating expenses 1,500,000
200,000 Credit: Current liabilities P1,250,000 P1,000,000 Mortgage
loan 4,000,000 500,000 Common stock, P50 par 20,000,000 7,500,000
Share premium 3,700,000 500,000 Retained earnings 1,800,000
175,000 Sales 3,960,000 1,000,000 Investment income 40,000 -0-
Determine the amount of consolidated assets immediately after the
business combination.Required to answer. Single line text.
(0/2 Points)

Correct answers: 34072500

26.[Question 2/3] On January 1, 2019, P Company acquired 15,000
shares of S1 Company for P130 per share. P Company accounted for S1
shares as investment in associate applying the equity method. Share in
net income and any gain/loss on disposal is recognized in profit or loss
under “Investment income (loss)” account. On April 1, 2019, P
Company acquired an additional 120,000 shares of S1 Company for
P125. It was determined that the acquisition price included a P5 per
share control premium. P Company paid P80,000 for direct costs and
P40,000 for indirect costs. P Company also agreed to pay P500,000 if
the average annual net income of S Company for the next five years
will exceed P800,000. The fair value of the contingent consideration is
P200,000. NCI is recorded at its proportionate share in the net assets.
Financial information as of March 31, 2019 as follows: Debit: P
Company S1 Company Cash P17,250,000 P260,000 Accounts
receivable 1,700,000 1,065,000 Inventory 2,800,000 1,500,000 Land
and building – net 3,500,000 2,000,000 Property, plant & equipment –
net 4,585,000 5,250,000 Investment in associate (S1) 1,915,000 -0-
Cost of sales 1,500,000 400,000 Operating expenses 1,500,000
200,000 Credit: Current liabilities P1,250,000 P1,000,000 Mortgage
loan 4,000,000 500,000 Common stock, P50 par 20,000,000 7,500,000
Share premium 3,700,000 500,000 Retained earnings 1,800,000
175,000 Sales 3,960,000 1,000,000 Investment income 40,000 -0-
Determine the amount of goodwill immediately after the business
combination.Required to answer. Single line text.
(0/2 Points)

Correct answers: 9282500

27.Pares Company acquires 15% of Serap Company's common stock
for P500,000 cash and carries the investment using the cost method. A
few months later, Pares purchases another 60% of Serap Company's
stock for P2,200,000. At that date, Serap Company reports identifiable
assets with a book value of P3,900,000 and a fair value of P5,100,000,
and it has liabilities with a book value and fair value of P1,900,000. The
fair value of the 25% non-controlling interest in Serap Company is
P900,000. Determine the amount of goodwill arising on consolidation if
NCI is to be valued on the proportionate basis.Required to answer.
Single line text.
(0/2 Points)

Correct answers: 350000

28.On September 1, 2019, Company P acquires 75% (750,000 ordinary
shares) of Company S for P8,250,000 (P11 per share). In the period
around the acquisition date. Company S's shares are trading at about
P8 per share. Company P pays a premium over market because of the
synergies it believes it will get. It is therefore reasonable to conclude
that the fair value of Company S's as a whole may not be P10,000,000.
In fact, an independent valuation shows that the value of Company S is
P10,700,000 (fair value of Company S). Assuming that the fair value of
the net identifiable assets is P8,000,000 (carrying value is P6,000,000)
Goodwil arising on consolidation if NCI is to be valued at fair
value:Required to answer. Single line text.
(0/2 Points)

Correct answers: 2700000

29.[Question 1/3] The financial statements for Goodwin, Inc. and Corr
Company for the year ended December 31, 2019, prior to Goodwin's
business combination transaction regarding Corr, follow: Goodwin Corr
Revenues P 2,700 P600 Expenses 1,980 400 Net Income P720 P200
Retained earnings. 1/1 P2,400 P400 Net income 720 200 Dividends
(270) (0) Retained earnings, 12/31 P2,850 P600 Cash P240 P220
Receivables & inventory 1,200 240 Buildings (net) 2,700 600
Equipment (net) 2,100 1,200 Total assets P6,240 P2,360 Liabilities
P1,500 P820 Common stock 1,080 400 Additional paid-in capital 810
540 Retained earnings 2,850 600 Total liabilities & SHE P6,240 P2,360
On December 31, 2019, Goodwin issued P600 in debt and 35 shares of
its P10 par value common stock to the owners of Corr to purchase all of
the outstanding shares of that company. Goodwin shares had a fair
value of P30 per share. Goodwin paid P40 to a broker for arranging the
transaction. Goodwin paid P35 in stock issuance costs. Corr's
equipment was actually worth P1,400 but its buildings were only
valued at P560. What amount is the investment recorded on Goodwin’s
book?Required to answer. Single line text.
(2/2 Points)

30.[Question 2/3] The financial statements for Goodwin, Inc. and Corr
Company for the year ended December 31, 2019, prior to Goodwin's
business combination transaction regarding Corr, follow: Goodwin Corr
Revenues P2,700 P600 Expenses 1,980 400 Net Income P720 P200
Retained earnings. 1/1 P2,400 P400 Net income 720 200 Dividends
(270) (0) Retained earnings, 12/31 P2,850 P600 Cash P240 P220
Receivables & inventory 1,200 240 Buildings (net) 2,700 600
Equipment (net) 2,100 1,200 Total assets P6,240 P2,360 Liabilities
P1,500 P820 Common stock 1,080 400 Additional paid-in capital 810
540 Retained earnings 2,850 600 Total liabilities & SHE P6,240 P2,360
On December 31, 2019, Goodwin issued P600 in debt and 35 shares of
its P10 par value common stock to the owners of Corr to purchase all of
the outstanding shares of that company. Goodwin shares had a fair
value of P30 per share. Goodwin paid P40 to a broker for arranging the
transaction. Goodwin paid P35 in stock issuance costs. Corr's
equipment was actually worth P1,400 but its buildings were only
valued at P560. Compute for the consolidated revenues in
2019.Required to answer. Single line text.
(0/2 Points)

Correct answers: 2700

31.[Question 3/3] The financial statements for Goodwin, Inc. and Corr
Company for the year ended December 31, 2019, prior to Goodwin's
business combination transaction regarding Corr, follow: Goodwin Corr
Revenues P 2,700 P600 Expenses 1,980 400 Net Income P720 P200
Retained earnings. 1/1 P2,400 P400 Net income 720 200 Dividends
(270) (0) Retained earnings, 12/31 P2,850 P600 Cash P240 P220
Receivables & inventory 1,200 240 Buildings (net) 2,700 600
Equipment (net) 2,100 1,200 Total assets P6,240 P2,360 Liabilities
P1,500 P820 Common stock 1,080 400 Additional paid-in capital 810
540 Retained earnings 2,850 600 Total liabilities & SHE P6,240 P2,360
On December 31, 2019, Goodwin issued P600 in debt and 35 shares of
its P10 par value common stock to the owners of Corr to purchase all of
the outstanding shares of that company. Goodwin shares had a fair
value of P30 per share. Goodwin paid P40 to a broker for arranging the
transaction. Goodwin paid P35 in stock issuance costs. Corr's
equipment was actually worth P1,400 but its buildings were only
valued at P560. Compute for the consolidated retained earnings as of
December 31, 2019.Required to answer. Single line text.
(0/2 Points)

Correct answers: 2810

32.Watkins, Inc. acquires all of the outstanding stock of Glen
Corporation on January 1, 2019. At that date, Glen owns only three
assets and has no liabilities: Book Value Fair value Inventory P40,000
P50,000 Equipment (10-year remaining life) 80,000 75,000 Building
(20-year remaining life) 200,000 300,000 If Watkins pays P450,000 in
cash for Glen, what amount would be represented as the subsidiary's
Building in a consolidation at December 31, 2020?Required to answer.
Single line text.
(0/2 Points)

Correct answers: 270000

33.[Question 1/3] Davis Inc. purchased a controlling interest in Martin
Inc. on January 1, 20x2; when Martin's common stock and retained
earnings were carried at P190,000 and P60,000 respectively. On that
date, Martin's book values approximated its fair market values, with
the exception of the company's inventories and a patent held by
Martin. The patent, which had an estimated remaining useful life of ten
years, had a fair market value which was P20,000 higher than its book
value. Martin's inventories on January 1, 20x2 were estimated to have
a fair value that was P16,000 higher than their book value. It was
predicted that Martin's goodwill impairment test, which was to be
conducted on December 31, 20x3, would result in a loss equal to 10%
of the goodwill (regardless of the amount) at the date of acquisition
being recorded). During 20x2, Martin reported a net income of P60,000
and paid P12,000 in dividends. Martin's 20x3 net income and dividends
were P72,000 and P15,000, respectively. Martin uses straight-line
amortization for all of its assets and using equity method. Assuming
that Davis purchases 100% of Martin for P300,000, the amount of
goodwill on December 31, 20x3 amounted to:Required to answer.
Single line text.
(2/2 Points)

34.[Question 2/3] Davis Inc. purchased a controlling interest in Martin

Inc. on January 1, 20x2; when Martin's common stock and retained
earnings were carried at P190,000 and P60,000 respectively. On that
date, Martin's book values approximated its fair market values, with
the exception of the company's inventories and a patent held by
Martin. The patent, which had an estimated remaining useful life of ten
years, had a fair market value which was P20,000 higher than its book
value. Martin's inventories on January 1, 20x2 were estimated to have
a fair value that was P16,000 higher than their book value. It was
predicted that Martin's goodwill impairment test, which was to be
conducted on December 31, 20x3, would result in a loss equal to 10%
of the goodwill (regardless of the amount) at the date of acquisition
being recorded). During 20x2, Martin reported a net income of P60,000
and paid P12,000 in dividends. Martin's 20x3 net income and dividends
were P72,000 and P15,000, respectively. Martin uses straight-line
amortization for all of its assets and using equity method. Assuming
that Davis purchases 100% of Martin for P300,000, the investment in
Martin Inc. on December 31, 20x3 amounted to:Required to answer.
Single line text.
(0/2 Points)

Correct answers: 383600

35.[Question 3/3] Davis Inc. purchased a controlling interest in Martin
Inc. on January 1, 20x2; when Martin's common stock and retained
earnings were carried at P190,000 and P60,000 respectively. On that
date, Martin's book values approximated its fair market values, with
the exception of the company's inventories and a patent held by
Martin. The patent, which had an estimated remaining useful life of ten
years, had a fair market value which was P20,000 higher than its book
value. Martin's inventories on January 1, 20x2 were estimated to have
a fair value that was P16,000 higher than their book value. It was
predicted that Martin's goodwill impairment test, which was to be
conducted on December 31, 20x3, would result in a loss equal to 10%
of the goodwill (regardless of the amount) at the date of acquisition
being recorded). During 20x2, Martin reported a net income of P60,000
and paid P12,000 in dividends. Martin's 20x3 net income and dividends
were P72,000 and P15,000, respectively. Martin uses straight-line
amortization for all of its assets and using equity method. Assuming
that Davis acquires 80% of Martin for P300,000. The amount of full-
goodwill on December 31, 20x3 amounted to:Required to answer.
Single line text.
(2/2 Points)

36.[Question 1/3] Brand X Inc. purchased 100% controlling interest in

Brand Y Inc. for P350,000 on January 1, 20x1. On that date, Brand Y
Inc. had common stock and retained earnings worth P180,000 and
P20,000, respectively. Goodwill is tested annually for impairment. At
the date of acquisition, Brand Y's assets and liabilities were assessed
for fair value as follows: Inventory P5,000 less than book value
Equipment P30,000 less than book value Patent P24,000 less than
book value Bonds Payable P5,000 less than book value The Balance
Sheets of Both Companies, on at December 31, 20x1 are disclosed
below: Brand X Inc. Brand Y Inc. Cash P200,000 P45,000 Accounts
Receivable 100,000 40,000 Inventory 80,000 55,000 Equipment (net)
220,000 100,000 Patent -0- 60,000 Investment in Brand Y 348,000 -0-
Total Assets P948,000 P300,000 Current liabilities P480,000 P53,000
Bonds Payable 270,000 50,000 Common Shares 100,000 180,000
Retained Earnings 98,000 17,000 Total Liabilities & SHE P948,000
P300,000 The net incomes for Brand X and Brand Y for the year ended
December 31, 20x1 were P1,000 and P48,000 respectively. An
impairment test conducted on December 31, 20x1 revealed that the
goodwill should actually have a value P2,000 lower than the amount
computed on the date of acquisition. Both companies use a FIFO
system, and Brand Y's inventory on the date of acquisition was sold
during the year. Brand X did not declare any dividends during the year.
However, Brand Y paid P51,000 in dividends to make up for several
years in which the company had never paid any dividends. Brand Y's
equipment and patent have useful lives of 10 years and 6 years
respectively from the date of acquisition All bonds payable mature on
January 1, 20x6. What amount of goodwill will be reported in the
consolidated balance sheet immediately following the acquisition?
Required to answer. Single line text.
(0/2 Points)

Correct answers: 204000

37.[Question 2/3] Brand X Inc. purchased 100% controlling interest in
Brand Y Inc. for P350,000 on January 1, 20x1. On that date, Brand Y
Inc. had common stock and retained earnings worth P180,000 and
P20,000, respectively. Goodwill is tested annually for impairment. At
the date of acquisition, Brand Y's assets and liabilities were assessed
for fair value as follows: Inventory P5,000 less than book value
Equipment P30,000 less than book value Patent P24,000 less than
book value Bonds Payable P5,000 less than book value The Balance
Sheets of Both Companies, on at December 31, 20x1 are disclosed
below: Brand X Inc. Brand Y Inc. Cash P200,000 P45,000 Accounts
Receivable 100,000 40,000 Inventory 80,000 55,000 Equipment (net)
220,000 100,000 Patent -0- 60,000 Investment in Brand Y 348,000 -0-
Total Assets P948,000 P300,000 Current liabilities P480,000 P53,000
Bonds Payable 270,000 50,000 Common Shares 100,000 180,000
Retained Earnings 98,000 17,000 Total Liabilities & SHE P948,000
P300,000 The net incomes for Brand X and Brand Y for the year ended
December 31, 20x1 were P1,000 and P48,000 respectively. An
impairment test conducted on December 31, 20x1 revealed that the
goodwill should actually have a value P2,000 lower than the amount
computed on the date of acquisition. Both companies use a FIFO
system, and Brand Y's inventory on the date of acquisition was sold
during the year. Brand X did not declare any dividends during the year.
However, Brand Y paid P51,000 in dividends to make up for several
years in which the company had never paid any dividends. Brand Y's
equipment and patent have useful lives of 10 years and 6 years
respectively from the date of acquisition All bonds payable mature on
January 1, 20x6. What amount of goodwill will be reported in the
consolidated balance sheet on December 31, 20x1?Required to answer.
Single line text.
(0/2 Points)

Correct answers: 202000

38.[Question 3/3] Brand X Inc. purchased 100% controlling interest in
Brand Y Inc. for P350,000 on January 1, 20x1. On that date, Brand Y
Inc. had common stock and retained earnings worth P180,000 and
P20,000, respectively. Goodwill is tested annually for impairment. At
the date of acquisition, Brand Y's assets and liabilities were assessed
for fair value as follows: Inventory P5,000 less than book value
Equipment P30,000 less than book value Patent P24,000 less than
book value Bonds Payable P5,000 less than book value The Balance
Sheets of Both Companies, on at December 31, 20x1 are disclosed
below: Brand X Inc. Brand Y Inc. Cash P200,000 P45,000 Accounts
Receivable 100,000 40,000 Inventory 80,000 55,000 Equipment (net)
220,000 100,000 Patent -0- 60,000 Investment in Brand Y 348,000 -0-
Total Assets P948,000 P300,000 Current liabilities P480,000 P53,000
Bonds Payable 270,000 50,000 Common Shares 100,000 180,000
Retained Earnings 98,000 17,000 Total Liabilities & SHE P948,000
P300,000 The net incomes for Brand X and Brand Y for the year ended
December 31, 20x1 were P1,000 and P48,000 respectively. An
impairment test conducted on December 31, 20x1 revealed that the
goodwill should actually have a value P2,000 lower than the amount
computed on the date of acquisition. Both companies use a FIFO
system, and Brand Y's inventory on the date of acquisition was sold
during the year. Brand X did not declare any dividends during the year.
However, Brand Y paid P51,000 in dividends to make up for several
years in which the company had never paid any dividends. Brand Y's
equipment and patent have useful lives of 10 years and 6 years
respectively from the date of acquisition All bonds payable mature on
January 1, 20x6. What amount of total assets be reported in the
consolidated balance sheet on December 31, 20x1?Required to answer.
Single line text.

(0/2 Points)

Correct answers: 1055000