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    Killua Ltd. acquired all of Gon Ltd.'s assets and liabilities in exchange for 100,000 shares of its stock. Gon Ltd.'s assets included P50,000 cash, P20,000 in furniture and fittings, P5,000 in accounts receivable, and P125,000 plant, while its liabilities consisted of P15,000 in accounts payable and P8,000 in current tax liability and P2,000 provision for annual leave. The fair value of each Killua share was P1.90 at the acquisition date.

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    Killua Ltd. acquired all of Gon Ltd.'s assets and liabilities in exchange for 100,000 shares of its stock. Gon Ltd.'s assets included P50,000 cash, P20,000 in furniture and fittings, P5,000 in accounts receivable, and P125,000 plant, while its liabilities consisted of P15,000 in accounts payable and P8,000 in current tax liability and P2,000 provision for annual leave. The fair value of each Killua share was P1.90 at the acquisition date.

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    AudPrin 2

    Uploaded by

    elsana philip
    Killua Ltd. acquired all of Gon Ltd.'s assets and liabilities in exchange for 100,000 shares of its stock. Gon Ltd.'s assets included P50,000 cash, P20,000 in furniture and fittings, P5,000 in accounts receivable, and P125,000 plant, while its liabilities consisted of P15,000 in accounts payable and P8,000 in current tax liability and P2,000 provision for annual leave. The fair value of each Killua share was P1.90 at the acquisition date.

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    of 4

    BUSINESS COMBINATION

    1. On December 2015, Killua Ltd. acquired all


    the assets and liabilities of Gon Ltd. with Killua
    Ltd. issuing 100,000 shares to acquire these net
    assets. The fair value of Gon Ltd.’s assets and
    liabilities at this date were:
     
    Cash P50, 000
    Furniture and Fittings 20, 000
    Accounts Receivable 5, 000
    Plant 125, 000
    Accounts Payable 15, 000
    Current Tax Liability 8, 000
    Provision for annual leave 2, 000
     The financial year for Killua Ltd. is January- December.
    The fair value of each Killua Ltd. share at acquisition date is 1.90. At acquisition date, the
    acquirer could only determine a provisional fair value for the plant. On March 1, 2016,
    Killua Ltd. received the final value from the independent appraisal, the fair value at
    acquisition date being P131, 000. Assuming the plant had a further five year life from the
    acquisition date.
    The amount of goodwill arising from the business combination at December 1, 2015 ?
    a. P15, 000 c. P5, 000
    b. 9, 000 d. 0

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