Illustration: Restructuring ProvisionsOn January 1, 20x1, ABC Co. acquired all the assets and liabilities of XYZ Inc. forP1,000,000. On this date, XYZ’s assets and liabilities have fair values of P1,600,000and P900,000, respectively.ABC Co. has estimated restructuring provisions of P200,000 representing costs ofexiting the activity of XYZ, including costs of terminating and relocating the employeesof XYZ.Requirement: Compute for goodwill.**Solution:Consideration transferredP 1,000,000Non-controlling interest in the acquiree-Previously held equity interest in the acquiree-TotalP1,000,000FV of net identifiable assets acquired (P1.6M-.9M)(700,000)GoodwillP 300,000*The restructuring provisions are simplyignoredin the computation of goodwill.*These are considered only when they qualify for recognition under PAS 37 at theacquisition date.*Restructuring provisions that do not meet the recognition criteria as at the acquisitiondate are recognized as post-combination expenses.