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Northern Phil. assembles the following data pertaining to Southern Phil. in determining the

amount of goodwill to be paid for the net assets and goodwill of the latter company.

Assets at fair market value excluding goodwill

Assets at book value excluding goodwill

Liabilities as adjusted

Liabilities at book value

Stockholders' equity at book value excluding goodwill

$P4,500,000$

$P4,000,000$

P$1,200,000$

P$1,000,000$

P$3,000,000$

Past earnings:

REQUIRED: Place answers$/$solution in a $12$ or $14-$column worksheet.

Compute the amount of goodwill under each of the following methods to be treated

independently:

a$.$ On Jan. $1,2022,$ goodwill is valued at average earnings for three$(3)$ years. Normal earnings

rate is $10\%$ of net tangible assets.

b$.$ Goodwill is valued at average excess earnings capitalized at $12-\frac{1}{2}\%.$ Normal earning rate is

$8\%$ of net tangible assets. Prepare also the entries of Northern Phil. & Southern Phil.

c$.$ Northern Phil. paid P$2,800,000$ cash for the net tangible assets of Southern Phil. including

goodwill. Prepare also the entries of Northern Phil. & Southern Phil.

Compute the amount of goodwill $($independent from no$.1)$ if Northern Phil. on Jan. $1,2022$

paid P$2,800,000$ cash for $75,000$ shares of the outstanding common stock of Southern Phil. The

$75,000$ shares is equal to $75\%.$

a$.$ The fair value attributable to the non$-$controlling interest of shares

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