Step-by-step explanation

Problem 6
1.a. Goodwill = P360,955
Goodwill = Purchase Consideration + Non-controlling interests - Net Assets
Purchase Consideration = Cash + Present value of Purchase consideration to be paid in 5 installments =
P1,000,000 + [P200,000 * 3.60478] = P 1,720,955
Net Assets = Total Assets - Liabilities = P3,400,000 - P1,700,000 = P1,700,000
Non-Controlling interests = P1,700,000 * 20% = P340,000
Therefore, Goodwill = P1,720,955 + P340,000 - P1,700,000 = P360,955
Note: Technical knowhow is to be considered after the business combination, so it is ignored here.

2..c. Goodwill = P50,000

Goodwill = Purchase Consideration + Non-controlling interests - Net Assets
Purchase Consideration = P1,200,000
Net Assets = Total Assets - Liabilities = (P3,300,000 - P900,000) + (P900,000 - P150,000) - P1,700,000 =
P1,450,000
Non-Controlling interests = P1,200,000 / 80% * 20% = P300,000
Therefore, Goodwill = P1,200,000 + P300,000 - P1,450,000 = P50,000

Problem 7 - MCQs
2.b. Goodwill = P400,000
Goodwill = Purchase Consideration + Non-controlling interests - Net Assets
Purchase Consideration = P1,000,000
Net Assets = P800,000
Non-Controlling interests = P800,000 * 25% = P200,000
Therefore, Goodwill = P1,000,000 + P200,000 - P800,000 = P400,000

3.d. P500,000
Goodwill = Purchase Consideration + Non-controlling interests - Net Assets
Purchase Consideration = P1,000,000 + P100,000 = P1,100,000
Net Assets = P800,000
Non-Controlling interests = P800,000 * 25% = P200,000
Therefore, Goodwill = P1,100,000 + P200,000 - P800,000 = P500,000

Full IFRS: Transaction costs are excluded under IFRS 3 (revised). Contingent consideration is recognised
regardless of the probability of payment. IFRS for SMEs: Transaction costs are included in the acquisition
costs. Contingent considerations are included as part of the acquisition cost if it is probable that the
amount will be paid and its fair value can be measured reliably.

IFRS for SMEs: Transaction costs are included in the acquisition costs. Contingent considerations are
included as part of the acquisition cost if it is probable that the amount will be paid and its fair value can
be measured reliably.