2022 Formula One World Championship pre-season testing session just started and due to the porpoising safety issues of the Formula One cars of Toyota Racing Limited, the price of its shares plummeted. This event gave Honda Racing Ltd. the opportunity to bugfy 45% of outstanding stocks of Toyota Racing Ltd on March 5, 2022. It was noted that Honda Racing Ltd. owned 10% of the outstanding shares of Toyota Racing Ltd amounting to P1,000,000 as of June 30, 2021 and accounted it as investment in equity securities through profit or loss. The following information showed the book value and fair values of Toyota Racing Limited on March 5, 2022. Book Value Fair Value Total Assets 12,070,000 15,300,000 Total Liabilities 2,140,000 2,140,000 Additional information are as follows: Honda Racing Limited total consideration transferred amounted to P6,750,000 inclusive of control premium of P250,000. The fair value of non-controlling interest is P5,500,000. 1. How much is the goodwill or gain on bargain purchase? a. 1,012,000 b. 1,590,000 c. 590,000 d. 956,444 2. What is the measurement of previously held shares? a. 1,000,000 b. 1,500,000 c. 1,444,444 d. 1,250,000
2022 Formula One World Championship pre-season testing session just started and due to the porpoising safety issues of the Formula One cars of Toyota Racing Limited, the price of its shares plummeted. This event gave Honda Racing Ltd. the opportunity to bugfy 45% of outstanding stocks of Toyota Racing Ltd on March 5, 2022.
It was noted that Honda Racing Ltd. owned 10% of the outstanding shares of Toyota Racing Ltd amounting to P1,000,000 as of June 30, 2021 and accounted it as investment in equity securities through profit or loss.
The following information showed the book value and fair values of Toyota Racing Limited on March 5, 2022.
|
|
Book Value |
Fair Value |
|
Total Assets |
12,070,000 |
15,300,000 |
|
Total Liabilities |
2,140,000 |
2,140,000 |
Additional information are as follows:
- Honda Racing Limited total consideration transferred amounted to P6,750,000 inclusive of control premium of P250,000.
- The fair value of non-controlling interest is P5,500,000.
1. How much is the
a. 1,012,000
b. 1,590,000
c. 590,000
d. 956,444
2. What is the measurement of previously held shares?
a. 1,000,000
b. 1,500,000
c. 1,444,444
d. 1,250,000
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