How much is the goodwill or gain on bargain purchase

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Problem 1: On January 1, 20x1, Creek Co. acquired all the assets and assumed all the liabilities of Bamboo Co. for P 2,400,000. Relevant information follows: Assets Carrying amounts Fair values 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 Liabilities Payables 400,000 480,000 · Bamboo Co. has research and development projects with fair value of P 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 dot not affect the tax base of the assets and liabilities. The tax rate is 30%.
  • Creek incurred P 100,000 on general administrative costs of maintaining an internal acquisitions department.

How much is the goodwill (gain on bargain purchase)?

Reference no: EM132726275

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