The assets and liabilities of ABC were summarized as follows: Cash P66,000; Inventories P198,000; Property and Equipment (net) P396,000 and Liabilities P148,500. On April 1, 2021, the DEF Company acquired the above net assets of ABC, in a transaction properly accounted for as purchase by paying P578,750 cash. Furthermore, it was determined that the inventories ABC had a market value of P156,750 and the property and equipment of P462,000. What should be the amount recorded as goodwill by DEF as a result of the business combination?
The assets and liabilities of ABC were summarized as follows: Cash P66,000; Inventories P198,000; Property and Equipment (net) P396,000 and Liabilities P148,500. On April 1, 2021, the DEF Company acquired the above net assets of ABC, in a transaction properly accounted for as purchase by paying P578,750 cash. Furthermore, it was determined that the inventories ABC had a market value of P156,750 and the property and equipment of P462,000. What should be the amount recorded as goodwill by DEF as a result of the business combination?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What should be the amount recorded as goodwill by DEF as a result of the business combination
A. 42,500
B. 0
C. 123,750
D. 123,200
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