Required:

1. Compute for the goodwill (Show your solution).

Consideration transferred
Common shares (25,000 X P 25) P 625,000
Notes payable 150,000
Contingent consideration
(100,000 X 30%) 30,000
TOTAL P 805,000
Less: Fair value of net assets of acquired company
Cash P 20,000
Receivables – net 40,000
Inventories 60,000
Land 200,000
Buildings – net 300,000
Equipment – net 250,000
In-process R&D 50,000
Accounts payable (60,000)
Other liabilities (140,000) 720,000
GOODWILL P 85,000

2. Prepare the journal entries by ABC Corp. to record the acquisition.

2015
December 31 Acquisition-related expenses 65,000
Cash 65,000

Paid-in capital in excess of par 12,000

Cash 12,000