On January 1, 20x1, Entity A acquires all the assets and liabilities of Entity B for P2,000,000. Entity B's identifiable assets and liabilities have fair values of P4,000,000 and P2,200,000, respectively. Additional information: Prior to the business combination, Entity B is a franchisee of Entity A. The franchise agreement has a remaining term of 5 years, which either party can terminate without any penalty. The franchise agreement has a fair value of P300,000, of which P100,000 is the "at-market" value. The "off-market" value is favorable to Entity A, but unfavorable to Entity B. Entity A's related 'contract liability' account has a carrying amount of P230,000, while Entity B's related 'franchise' account has a carrying amount of P150,000. Requirement: Compute for the goodwill.
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On January 1, 20x1, Entity A acquires all the assets and liabilities of Entity B for P2,000,000. Entity B's identifiable assets and liabilities have fair values of P4,000,000 and P2,200,000, respectively.
Additional information:
- Prior to the business combination, Entity B is a franchisee of Entity A. The franchise agreement has a remaining term of 5 years, which either party can terminate without any penalty.
- The franchise agreement has a fair value of P300,000, of which P100,000 is the "at-market" value. The "off-market" value is favorable to Entity A, but unfavorable to Entity B.
- Entity A's related 'contract liability' account has a carrying amount of P230,000, while Entity B's related 'franchise' account has a carrying amount of P150,000.
Requirement: Compute for the
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- On December 1, 20X1, CANOROUS Co. granted a 5-year franchise to MELODIOUS, Inc. for an initial franchise fee of P 400,000 and a 10% sales-based royalty. The initial franchise fee is non-refundable and due upon signing of the contract. At contract inception, CANOROUS determines that the nature of its promise to grant the license is to provide the customer with the right to access CANOROUS' intellectual property as it exists throughout the license period. As of December 31, 20X1, CANOROUS has no remaining obligation or intent to refund any of the cash received, all the initial services necessary to setup the contract have been performed, and MELODIOUS started operating the franchised business. MELODIOUS reported sales of P 800,000 for 20X1. How much revenue shall CANOROUS recognize in 20X1? (Round off your answer to the nearest peso.)On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial franchisefee of ₱400,000 and a 10% sales-based royalty. The initial franchise fee is non-refundable and due upon signing ofthe contract. At contract inception, CANOROUS determines that the nature of its promise to grant the license is toprovide the customer with the right to access CANOROUS’s intellectual property as it exist throughout the licenseperiod. As of December 31, 20x1, CANOROUS has no remaining obligation or intent to refund any of the cashreceived, all the initial services necessary to setup the contract have been performed, and MELODIOUS startedoperating the franchised business. MELODIOUS reported sales of ₱800,000 for 20x1. On December 31, 20x1, Entity A enters into a contract with Customer X to transfer a license for a fixed fee of₱100,000 payable as follows: 20% is payable upon signing of contract. 80% is represented by a note receivable collectible in 4 equal…On January 1 of the current year, Lemon Meyer Corporation purchases the net assets of Vivien's unincorporated business for $1,100,000. The tangible net assets have a $400,000 book value and a $500,000 FMV. The purchase agreement states that Vivien will not compete with Lemon Meyer Corporation by starting a new business in the same area for a period of five years. The stated consideration received by Vivien for the covenant not to compete is $80,000. Other intangible assets included in the purchase agreement are as follows: E (Click the icon to view the other intangible assets.) Read the requirements Requirement a. How would Vivien's assets be recorded for tax purposes by Lemon Meyer Corporation? Recorded value Tangible assets Data table Intangible assets: Covenant not to compete • Goodwill: $400,000 • Patents (13-year remaining useful life): $70,000 • Customer list $50,000 Goodwill Patents Customer list Total Print Done
- On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial franchisefee of ₱400,000 and a 10% sales-based royalty. The initial franchise fee is non-refundable and due upon signing ofthe contract. At contract inception, CANOROUS determines that the nature of its promise to grant the license is toprovide the customer with the right to access CANOROUS’s intellectual property as it exist throughout the licenseperiod. As of December 31, 20x1, CANOROUS has no remaining obligation or intent to refund any of the cashreceived, all the initial services necessary to setup the contract have been performed, and MELODIOUS startedoperating the franchised business. MELODIOUS reported sales of ₱800,000 for 20x1. How much revenue shallCANOROUS recognize in 20x1? On December 31, 20x1, Entity A enters into a contract with Customer X to transfer a license for a fixed fee of₱100,000 payable as follows: 20% is payable upon signing of contract. 80% is represented…On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial franchisefee of ₱400,000 and a 10% sales-based royalty. The initial franchise fee is non-refundable and due upon signing ofthe contract. At contract inception, CANOROUS determines that the nature of its promise to grant the license is toprovide the customer with the right to access CANOROUS’s intellectual property as it exists throughout the licenseperiod. As of December 31, 20x1, CANOROUS has no remaining obligation or intent to refund any of the cashreceived, all the initial services necessary to set up the contract have been performed, and MELODIOUS startedoperating the franchised business. MELODIOUS reported sales of ₱800,000 for 20x1. How much revenue shallCANOROUS recognize in 20x1?On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial franchise fee of ₱400,000 and a 10% sales-based royalty. The initial franchise fee is non-refundable and due upon signing of the contract. At contract inception, CANOROUS determines that the nature of its promise to grant the license is to provide the customer with the right to access CANOROUS’s intellectual property as it exists throughout the license period. As of December 31, 20x1, CANOROUS has no remaining obligation or intent to refund any of the cash received, all the initial services necessary to set up the contract have been performed, and MELODIOUS started operating the franchised business. MELODIOUS reported sales of ₱800,000 for 20x1. How much revenue shallCANOROUS recognize in 20x1? On December 31, 20x1, Entity A enters into a contract with Customer X to transfer a license for a fixed fee of ₱100,000 payable as follows: a. 20% is payable upon signing of the contract. b. 80%…
- On January 1, 2020, Cecilia Company purchased a patent from an original patentee for P2,400,000. The remaining legal life of the patent is 15 years but the useful life is only 12 years. On January 1, 2021, the entity paid P550,000 in successfully defending the patent in an infringement suit filed against the entity. On January 1, 2022, the entity acquired a competing patent for P1,500,000. The competing patent has a remaining legal life of 15 years but it is not to be used because it was intended to protect the original patent. What is the carrying amount of the patent on December 31, 2022? А. 3,150,000 B. 3,600,000 С. 3,200,000 D. 3,500,000On January 1, 2020, Cecilia Company purchased a patent from an original patentee for P2,400,000. The remaining legal life of the patent is 15 years but the useful life is only 12 years. On January 1, 2021, the entity paid P550,000 in successfully defending the patent in an infringement suit filed against the entity. On January 1, 2022, the entity acquired a competing patent for P1,500,000. The competing patent has a remaining legal life of 15 years but it is not to be used because it was intended to protect the original patent. What is the carrying amount of the patent on December 31, 2022?On January 1, 20x8, Jolybee Corporation sold a franchise to Mr. AMG for P10,000,000 for the right to operate as a franchisee of Jolybee Corporation. Terms of the franchise contract were: 1. The initial franchise fee of P1,000,000 is payable in cash, when the contract is signed and the balance in five equal instalment every december 31, evidenced by a 12% promissory note. 2. The franchisor will assist in locating the site, supervise construction activity and training of management and employees. On December 31, 20x8 direct cost of services rendered to the franchisee amounted to P2,000,000. Assuming that there is substantial performance of services required in the contract and the collectability of the note receivable is not reasonably assured, using the instalment method how much net income is to be recognized by Jolybee on December 31, 20x8?
- On January 1, 2021, Entity A and Entity B incorporated AB Company. The contractual agreement provided that the decisions on relevant activities will require the unanimous consent of both Entity A and Entity B, and they will have right to the net assets of AB Company. Entity A and Entity B invested P400,000 and P600,000 respectively, equivalent to 40:60 capital interest of AB Company. The financial statements of AB Company provided the following data for its two-year operation (see image below).1. How much is the balance of Investment in Joint Venture to be reported by Entity B in its Statement of Financial Position at December 31, 2022? 2. How much is the balance of Investment in Joint Venture to be reported by Entity A in its Statement of Financial Position at December 31, 2021? _______________On January 1, 20x1, Ai Inc. acquired all the assets and liabilities of Pon Corp. forP1,200,000. Pon Corpassets and liabilities have a fair value of P2,500,000 andP1,300,000, respectively.Additional Information:● Ai is the exclusive distributor of Pon's products. The agreement has aremaining term of five years. The contract does not have any cancellationclause.● The agreement has a fair value of P400,000, of which 30% is "at the market.”The off-market component is unfavorable to the Ai Inc.● No assets and liabilities related to the contract were recognized.How much is the "gain of bargain purchase" to be recognized by Ai Inc. as a result ofthe business combination?Use the following to answer questions 8 through 10: On May 1, 2021, Jazzie Co. agreed to sell the assets of its Mister Division to Shawna Inc. for $80 million. The sale was completed on December 31, 2021. Jazzie’s year ends on December 31st. The following additional facts pertain to the transaction: The Mister Division qualifies as a component of an entity as defined by GAAP. Mister's net assets totaled $48 million on Jazzie's books at the time of the sale. Mister incurred a pre-tax operating loss of $10 million in 2021. Jazzie’s income tax rate is 40%. In the 2021 income statement for Jazzie Co., they would report after tax income from discontinued operations of: Group of answer choices $9.2 million. $13.2 million. $22 million. $26 million.