The following are the balance sheet of FAR and SAR Co. when P decided toacquire 4,500 SHARES of S for P577,800:FARSARCompanyCompany850,000200,000600,0001,260,0002,910,000300,0002,000,000400,000210,0002,910,00050,000100,000200,000450,000800,000200,000500,000CashReceivablesInventoriesPlant and equipmentTotalLiabilitiesShare capital, par P100Share premiumRetained earnings100,000800,000TotalAssume that FAR acquired the 4,500 shares of stocks of SAR by issuing 5,000 of itsshares with a market value of P115.56 and on this date the market values of Sinventories and PPE are P210,000 and P470,000 respectively. (Use Full GoodwillMethod)1. Regular journal entry to record the business combination transaction.2. Working paper adjustment and elimination entry for consolidation purposes.

Here FAR is the acquiror and SAR is the Acquiree. During the calculation of Net assets , Market…

Answered: Regular journal entry to record the…

Business

Accounting

Regular journal entry to record the business combination transaction.

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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Concept explainers

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

The following are the balance sheet of FAR and SAR Co. when P decided to
acquire 4,500 SHARES of S for P577,800:
FAR
SAR
Company
Company
850,000
200,000
600,000
1,260,000
2,910,000
300,000
2,000,000
400,000
210,000
2,910,000
50,000
100,000
200,000
450,000
800,000
200,000
500,000
Cash
Receivables
Inventories
Plant and equipment
Total
Liabilities
Share capital, par P100
Share premium
Retained earnings
100,000
800,000
Total
Assume that FAR acquired the 4,500 shares of stocks of SAR by issuing 5,000 of its
shares with a market value of P115.56 and on this date the market values of S
inventories and PPE are P210,000 and P470,000 respectively. (Use Full Goodwill
Method)
1. Regular journal entry to record the business combination transaction.
2. Working paper adjustment and elimination entry for consolidation purposes.

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