Professional Documents
Culture Documents
Business Combination
a. After the merger, how much is the combined total assets in the books
of the acquirer?
2. On February 1, 2014, the Primex Co. acquired 100% of T&R Co. when the
fair value of the latters net assets was P29M. The consideration
transferred comprised of P22M cash paid at the acquisition date plus
another P10M cash to be paid after February 1 provided a specified
profit target was met by T&R. At the acquisition date, there was only
low probability of the profit target being met, so the fair value of
the contingent consideration liability was P1.5M. Before the year
ended, the profit target was met and P10M cash was transferred. As a
result of all foregoing transactions, how much will retained earnings
change?
Inventories P 62,500
Equipment 312,500
Patent 61,250
Goodwill ?
Investment in Esprit P 468,750
Non-controlling interest ?
On December 31, 2014, CEO Company reported net income of P525,000 and
paid dividends of P180,000 to Arrow, Arrow reported earnings from its
separate operation of P1,425,000 and paid dividends of P690,000.
Goodwill had been impaired and should be reported at P30,000 on
December 31, 2014.
a. How much is the non-controlling interest in profit of CEO Company on
December 31, 2014?
b. How much is the consolidated profit on December 31, 2014?
c. How much is the consolidated retained earnings attributable to
parents shareholders equity in December 31, 2014?
d. What amount of non-controlling interest is presented in the
consolidated statement of financial position on December 31, 2014?
On January 2, 2013 the asset and liabilities of Sincere Co. were stated
a their fair values except for machinery which is undervalued by
P225,000 (remaining life is 3 years). On September 30, 2013, Sincere
sold merchandise to Pure at an intercompany profit of P150,000; 25% was
still unsold at year-end. Likewise, on October 2, 2014, Sincere
purchased merchandise from Pure for P3,600,000. The selling affiliate
included a 20% mark-up on cost on this sale. Only 75% of these
purchases had been sold to unrelated parties as of December 31, 2014.
As of December 31, 2014, goodwill was determined to be impaired by
P60,000.
SD Corp. acquired the net assets of both GM and SR. Paying cash
in the amount of P185,000 and by issuing 198,500 shares to GM.
Paying cash in the amount of P72,000 and by issuing 54,350 shares
to SR. The par value of these shares is P35/share and market
value as of January 1, 2014 is P40/share. SD Corp. also incurred
the following unpaid expenses:
GM SR
Indirect Costs P 93,750 P101,250
Finders Fee 66,250 35,000
Accounting and legal 343,750 362,500
fees for SEC
registration
Printing costs of 125,000 93,750
stock certificates
SDs retained earnings has a balance of P10,750,000 on January
1, 2014, immediately before the acquisition.