Compute for the goodwill arising from the acquisition

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Reference no: EM132726255

Question - On January 1, 20x1, Row Co. acquired 10,000 shares out of the 100,000 outstanding shares of Boat Co. for P30,000. Transaction costs on the acquisition amounted to P2,000. Row Co. classified the shares as financial asset measured at fair value through profit or loss. The shares were trading at P5 on December 31, 20x1.

On July 1, 20x2, Row Co. acquired additional 80,000 shares of Boat Co. at P8 per share, the quoted price on that date. The outstanding shares of Boat Co. remained at 100,000 shares. Information on Boat Co.'s financial position as of this date follows:

Carrying Amount Fair Value

Assets 1,300,000 1,415,000

Liabilities (750,000) (750,000)

Net 550,000 665,000

Row Co. elected to measure non-controlling interests using the proportionate share method.

Requirements -

a. Compute for the goodwill arising from the acquisition on July 1, 20x2.

b. Provide all the journal entries on July 1, 20x2.

Reference no: EM132726255

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