Sora Company acquired the net assets of Roxas Company on January 1, 2020. The statements of financial position for Sora and Roxas are presented, showing the book and fair values of their assets and liabilities. Sora paid P2,000,000 cash for the acquisition, excluding a contingent consideration of P500,000 if Roxas achieves net income of P2,500,000 in 2020, which has a 40% probability and fair value of P150,000. Sora also incurred P105,600 in legal fees, P49,000 in broker's fees, and P50,000 in other direct acquisition costs.
Sora Company acquired the net assets of Roxas Company on January 1, 2020. The statements of financial position for Sora and Roxas are presented, showing the book and fair values of their assets and liabilities. Sora paid P2,000,000 cash for the acquisition, excluding a contingent consideration of P500,000 if Roxas achieves net income of P2,500,000 in 2020, which has a 40% probability and fair value of P150,000. Sora also incurred P105,600 in legal fees, P49,000 in broker's fees, and P50,000 in other direct acquisition costs.
Sora Company acquired the net assets of Roxas Company on January 1, 2020. The statements of financial position for Sora and Roxas are presented, showing the book and fair values of their assets and liabilities. Sora paid P2,000,000 cash for the acquisition, excluding a contingent consideration of P500,000 if Roxas achieves net income of P2,500,000 in 2020, which has a 40% probability and fair value of P150,000. Sora also incurred P105,600 in legal fees, P49,000 in broker's fees, and P50,000 in other direct acquisition costs.
Case A: Sora paid P2,000,000 cash which excludes a contingent
consideration to pay P500,000 if Roxas will be able to report net income of at least P2,500,000 for the year 2020. It was estimated that there is only a 40% probability that Roxas will be able to generate at least P2,500,000. The fair value of the contingent consideration on date of acquisition was P150,000. Sora paid the following acquisition-related costs: Legal fees Broker’s fee Other direct cost of acquisition