Reference no: EM132632194

Question - The balance sheet of Palma Enterprises and Selda Company at December 31, 2016 are summarized below:

Accounts Palma Selda

Assets P5,000,000 P2,000,000

Liabilities 1,500,000 500,000

Capital stock, P40 par 2,500,000

Capital stock, P25 par 1,000,000

Retained earnings 1,000,000 500,000

At the date of acquisition, Selda's net assets are understated while its liabilities are fairly valued.

On January 1, 2017, Palma purchased 80% of Selda Company's outstanding shares for P2,000,000, when the fair value of Selda's net assets was P2,200,000. Palma issued 10,000 previously unissued shares in consideration of the acquisition. Palma is to assign an amount to the non-controlling interest at the date of acquisition based on the total fair value of Selda's outstanding shares.

Assume the amount assigned to the non-controlling interest at the date of acquisition is based on the total fair value of the identifiable net assets at that date, calculate the amount of goodwill recognized at January 1, 2017?