e-for-sale investment for a price of P1 ary 1, 2015, CPA Corporation purchas y from existing stockholders for P945 Sticky Company had the following sta purchases: sets

Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 28E
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Use the following information for question 1
CPA Corporation purchased a 10% interest in Sticky Company on January 1, 2010 as an
available-for-sale investment for a price of P120,00.
On January 1, 2015, CPA Corporation purchases 7,000 additional shares of Sticky
Company from existing stockholders for P945,000. This purchase increased CPA interest
to 70%. Sticky Company had the following statement financial position just prior to CPA
second purchases:
Assets
Liabilities and Equity
Current assets
Building (net)
300,000
Equipment (net)
Liabilities
Common stock, P30 par
495,000
195,000
420,000
300,000
Retained earnings
720,000
Total assets
1,215,000
Total liabilities and equity
1,215,000
On the date of the second purchase, CPA determines that the equipment of Sticky was
understated by P150,000 and had a 5-year remaining life. All other book values
approximate fair values. Any remaining excess is attributed to goodwill.
1. On January 1, 2015 consolidated statement of financial positon, what is
the amount of goodwill to be reported?
A. P180,000
B. P45,000
C. P75,000
D. P120,000
Transcribed Image Text:Use the following information for question 1 CPA Corporation purchased a 10% interest in Sticky Company on January 1, 2010 as an available-for-sale investment for a price of P120,00. On January 1, 2015, CPA Corporation purchases 7,000 additional shares of Sticky Company from existing stockholders for P945,000. This purchase increased CPA interest to 70%. Sticky Company had the following statement financial position just prior to CPA second purchases: Assets Liabilities and Equity Current assets Building (net) 300,000 Equipment (net) Liabilities Common stock, P30 par 495,000 195,000 420,000 300,000 Retained earnings 720,000 Total assets 1,215,000 Total liabilities and equity 1,215,000 On the date of the second purchase, CPA determines that the equipment of Sticky was understated by P150,000 and had a 5-year remaining life. All other book values approximate fair values. Any remaining excess is attributed to goodwill. 1. On January 1, 2015 consolidated statement of financial positon, what is the amount of goodwill to be reported? A. P180,000 B. P45,000 C. P75,000 D. P120,000
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