acquisition date, the acquirer could only determine a provisional fair value for the Plant. On March 9, 2022, ABC received the final value from the independent appraisal, the fair value of the Plant at acquisition date is P131,000 with a 5 year remaining useful life from date of acquisition. Determine a) Fair value of the net assets acquired b) amount of goodwill or gain from acquisition (two answers)

acquisition date, the acquirer could only determine a provisional fair value for the Plant. On March 9, 2022, ABC received the final value from the independent appraisal, the fair value of the Plant at acquisition date is P131,000 with a 5 year remaining useful life from date of acquisition. Determine a) Fair value of the net assets acquired b) amount of goodwill or gain from acquisition (two answers)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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11. On December 1, 2021, ABC Company acquired all the assets and liabilities of XYZ Inc. issuing 100,000 shares. The fair value of XYZ's assets and liabilities at this date are presented below (see image) The financial year for ABC Company is January to December. The fair value of each ABC share at acquisition date is P1.90. At the acquisition date, the acquirer could only determine a provisional fair value for the Plant. On March 9, 2022, ABC received the final value from the independent appraisal, the fair value of the Plant at acquisition date is P131,000 with a 5 year remaining useful life from date of acquisition. Determine a) Fair value of the net assets acquired b) amount of goodwill or gain from acquisition
On January 1, 2019, GRANGER Co. acquired 80% interest in HISTORIA, Inc. by issuing 5,000 shares with fair value of P30 per share and par value of P20 per share. The financial statements of GRANGER Co. and HISTORIA, Inc. immediately after the acquisition are shown in the image. On January 1, 2019, the fair value of the assets and liabilities of HISTORIA, Inc. were determined by appraisal, show in the image. The equipment has a remaining useful life as of 4 years from January 1, 2019. Prepare the consolidated statement of financial position as at January 1, 2019. GRANGER Co. elects to measure non-controlling interest as its proportionate share in HISTORIA’s net identifiable assets.
23. On January 1, 2021, Blue Company purchased 20% of the outstanding ordinary shares of Yellow Company for P 4,000,000. At the acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair values. The investor has a significant influence over the investee. The journal entry on January 1, 2021 would be:
DEF company acquired the assets and assumed liabilities of GHI Company on January 1, 2022 by paying P3,000,000 and issuing its own ordinary shares. The comparison of the acquirer’s balance sheet before and after business combination transaction is as follows: Balance sheet before Acquisition Balance Sheet after Acquisition Total Assets 13,545,000 17,595,000 Total Liabilities 3,760,000 ? Total SHE 9,785,000 ? The fair value of the identifiable net asset of the acquiree is P4,835,000 and the book value of acquiree’s liabilities amounting to P1,300,000 is lower compared to its fair value by P350,000. DEF company paid acquisition related costs amounting to P50,000. What is the fair market value of the ordinary shares issued by the acquirer? a. 2,500,000 b. 2,400,000 c. 2,480,000 d. 2,450,000
SB Corp. is offered 200,000 shares of EX Corp. ordinary shares in exchange for its net assets at August 30, 2020. The acquirer shares had a market value of P11 per share on that date. The balance sheet of the two companies at the date of acquisition follow: SB CORP EX CORP Total assets 1,097,500 1,733,250 Liabilities 1,097,500 383,250 Ordinary shares, par P1 800,000 25,000 Retained earnings (deficit) (15,000) 1,325,000 Total liabilities and stockholders’ equity 1,097,500 1,733,250 The goodwill (income from acquisition) resulting from the business combination would be
Acquirer Company acquired all the outstanding shares of Acquiree Company by issuing 50,000 shares of its P10 par value ordinary shares on July 1, 2022. The fair value of Acquirer’s share was P15. Acquirer also incurred P20,000 for legal fees and P15,000 for printing and registering the new shares. At the date of acquisition, Acquiree had the following balances: Assets – P850,000; Liabilities – P180,000; Share Capital – P500,000; Share Premium – P150,000; and Retained Earnings – P20,000. The carrying values of the identifiable assets and liabilities of Acquiree were equal to their fair values except for accounts receivable which was understated by P7,500 and plant assets with fair value lower than carrying value by P75,000. Answer the following: a. How much is the Increase in the Assets of Acquirer? b. Assuming that Acquirer purchased the net assets of Acquiree, how much is the Increase in the Assets of Acquirer? c. How much is the Increase in the Equity of Acquirer?
Acquirer Company acquired all the outstanding shares of Acquiree Company by issuing 50,000 shares of its P10 par value ordinary shares on July 1, 2022. The fair value of Acquirer’s share was P15. Acquirer also incurred P20,000 for legal fees and P15,000 for printing and registering the new shares. At the date of acquisition, Acquiree had the following balances: Assets – P850,000; Liabilities – P180,000; Share Capital – P500,000; Share Premium – P150,000; and Retained Earnings – P20,000. The carrying values of the identifiable assets and liabilities of Acquiree were equal to their fair values except for accounts receivable which was understated by P7,500 and plant assets with fair value lower than carrying value by P75,000.Assuming that Acquirer purchased the net assets of Acquiree, how much is the Increase in the Equity of Acquirer?
January on date of acquisition were: Share Capital-P400,0003; Share Premium- 1, 2021 for P2,200,000 when the fair value of Smile Company's Pavilion Corp. acquired an 80% interest from Smile Company on identifiable net assets was P2,000,000. Smile Company's equity acc s on date of acquisition were: Share Capital-P400,000; Share Premium P300,000; and Retained Earnings-P900,000. The price difference between the carrying value and fair value of net assete is attributable to a non-current depreciable asset with 5 years remaining life. Out of P100,000 out of pocket cost, 20% represent indirect cost and the balance is direct cost. Both companies are classified as SMES. Required 1. How much is the goodwill on the date of acquisition? 2. How much is the carrying value of goodwill on December 31, 2022?
On April 5. 2020, Paul Company purchased P50 par, 10,000 ordinary shares of George Company at P80 per share. The shares are designated as equity investments at Fair value through other comprehensive income. On October 26, 2020, Paul received 10,000 rights to purchase an additional 2,000 shares at P90 per share. The share rights received had an expiration date of February 1, 2021.1. How much is the income recognized upon receipt of share rights? a. P0 b. P10,000 c. P20,000 d. P 80,000 2. How much is the investment Income, assuming that all of the share rights are sold at its market value of P5 each? a. P50,000 b. P20,000 c. P10,000 d. P0
On January 1, 2021, the fair values of CHAESOO Inc. net assets were as follows:Current assets P100,000Equipment 150,000Land 50,000Buildings 300,000Liabilities 80,000On January 1, 2021, BLACKPINK Corp. purchased the net assets of CHAESOO by issuing 100,000shares of its P1 par value stock when the fair value of the stock was P6.20. It was further agreed thatBLACKPINK would pay an additional amount on January 1, 2023, if the average income during the2- year period of 2021 – 2022 exceeded P80,000 per year. The expected value of this consideration wascalculated as P184,000; the measurement period is one year. Requirement:Compute for the Goodwill or (Gain on Bargain Purchase) on January 1, 2021.
S&L Financial typically classifies equity investments as fair value through other comprehensive invome under the irrevucable uption permiued by IFRS 9. On Devember 27, 2022, S&L purchased Amber Company sharcs for $875,000 and sold the sharcs on January 3, 2023, for S880,000. At December 31, the shares had a fair value of $873,000. What pretax amounts did S&L include in its 2022 and 2023 other comprehensive income as a result of this investment?
On 1 July 2019, Christina Ltd acquired all the issued shares of Adeline Ltd, paying $120 000 cash and transferring 100 000 of its own shares to Adeline Ltd’s former shareholders. At that date, the financial statements of Adeline Ltd showed the following information. Share Capital $100000 General Reserve 50000 Retained Earnings 150000 All the assets and liabilities of Adeline Ltd were recorded at amounts equal to their fair values at the acquisition date. The fair value of Christina Ltd’s shares at acquisition date was $2 per share. Christina Ltd incurred $30 000 in acquisition‐related costs that included $5000 as share issue costs. Required Prepare the acquisition analysis at 1 July 2019. Prepare the journal entries for Christina Ltd to recognise the investment in Adeline Ltd at 1 July 2019. Prepare the consolidation worksheet entries for…