GUILARAN, KERR JOHN B.

BSA51KB1
Problem 14-2
1. Computation of Goodwill/Gain on Acquisition:

Acquisition Cost
P
Less: Fair Value of Net Assets
Gain on Acquisition

565,000
670,000
P

(105,000)

2. Journal Entries:

Cash & Receivables (CAT Corp.)

Inventory
Buildings & Equipment
Patent
Accounts Payable
Gain on Acquisition
Cash (DOG Company)

P
50,000
150,000
300,000
200,000
30,000
105,000
565,000

To record the acquisition of the net assets of CAT Corporation

Acquisition Expense
Cash

5,000
5,000

To record acquisition-related costs

Problem 14-4
1. Computation of Goodwill/Gain on Acquisition:

Acquisition Cost
P
Less: Fair Value of Net Assets
Goodwill

600,000
505,000
95,000

2. Journal Entries:

Cash
Accounts Receivable
Inventory
Land

60,000
100,000
115,000
70,000

Buildings & Equipment

Goodwill
Accounts Payable
Bonds Payable
Common Stock (P10 par)
Additional Paid-in Capital

350,000
95,000
10,000
180,000
120,000
480,000

To record the acquisition of the net assets of Tan Company

Acquisition Expense
Additional Paid-in Capital
Cash

10,000
18,000
28,000

To record acquisition-related costs

Problem 14-6
1. Computation of Goodwill/Gain on Acquisition:

Acquisition Cost (P40)

P
Less: Fair Value of Net Assets

600,000
420,000

Goodwill

180,000

Acquisition Cost (P20)

P
Less: Fair Value of Net Assets

300,000
420,000

Gain on Acquisition

(120,000)

2. Combined Balance Sheet After Acquisition

P40/share

Cash and receivables

Inventory
Building and equipment
Accumulated depreciation
Goodwill

TOTAL ASSETS
Accounts payable
Bonds payable
Common stock P10 Par value
Additional paid-in capital
Retained Earnings (including gain from
acquisition)
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

P20/share

P 350,000
645,000
1,050,000
(200,000)
180,000
P 2,025,000
P 140,000
485,000
450,000
550,000
400,000

P 350,000
645,000
1,050,000
(200,000)
P 1,845,000
P 140,000
485,000
450,000
250,000
520,000

P 2,025,000

P 1,845,000

Problem 14-8
1. Computation of Goodwill/Gain on Acquisition:

Acquisition Cost
P
Less: Fair Value of Net Assets
Goodwill

2,400,000
2,200,000
200,000

2. Dollars Transport Comparative Statement of Comprehensive Income:

Revenue
2,100,000
Net Income
Earnings per share
P 5.60

2011
P 1,400,000
500,000

2012
2013
P 1,800,000
P
565,000
P 5.00

700,000
P 4.52

Revenue for 2012:

P 2,000,000
(200,000)
P 1,800,000
Net Income 2012:
P 620,000
(55,000)
P 565,000
Earnings per share 2012:
P 565,000 / 125,000 shares = P 4.52
Earnings per share 2013:
P 700,000 / 125,000 shares = P 5.60
Problem 14-10
a.

Increase in common stock (P240,000 P200,000)

40,000
Increase in APIC (P420,000 P60,000)
Value of shares issued
400,000

360,000
P

b.

Total assets of Subic after acquisition

P1,130,000
Total assets of Subic before acquisition

650,000

Total fair value of assets of Clark before combination

P 480,000

c.

Par value of common stock after acquisition

240,000
Par value of common stock before acquisition
200,000
Par value of common stock issued

40,000
Divided by par value per share

P5
Number of shares issued

d.

8,000 shares

Value of shares computed in

400,000
Number of shares issued
Market price per share

8,000
P

50
Problem 14-12
1)

Liability from contingent consideration

Loss on contingent payment
Cash
To record the payment of the Contingent Liability

80,000
40,000
120,000

2011 Income
2012 Income
Total Income
Divide
Average Income
(2)

100,000.00
120,000.00
220,000.00
2.00
110,000.00

Average Income
Less
Total
Multiply
Cash Payment

Additional paid in capital

Common stock, P1 par

110,000.00
50,000.00
60,000.00
2.00
120,000.00
6,000
6,000

To record issuance for additional stocks issued

Average Income
Less
Estimated Recoverable Amount
Total
Carrying Amount
Divide
Fair Value Of Goodwill
Shares to be Issued
Goodwill Carying Amount
Impairment Loss on Goodwill

110,000.00
50,000.00
400,00060,000.00
340000
10
60,000
6,000
100000
40,000 )
(3)

Additional paid in capital

Common stock, P1 par
100,000

100,000

To record the issuance for additional stocks issued

Deficiency (P12 P8) x 200,000 shares

P800,000

Divided by fair value per share

8.00

Additional shares to be issued

100,000

Problem 14-14
1. Computation of Goodwill/Gain on Acquisition:

Acquisition Cost
P
Less: Fair Value of Net Assets

500,000
400,000

Goodwill

100,000

2.
a.) The goodwill is not impaired. As a rule, Goodwill is considered to be
impaired only if carrying amount of the units net assets (including
goodwill) exceeds the recoverable amount of the unit.
b.)

Journal Entry:
Goodwill Impairment Loss 40,000
Goodwill
40,000
To record the impairment of Goodwill