1. Use the following information for the next five questions:On January 1, 2021, ABC Co. acquired all of the identifiable assets and assumed all of the liabilities of XYZ, Inc. by issuing its own ordinary shares. Information at acquisition date is shown below: (see image below) Additional information: 1. ABC Co's share capital consists of 60,000 ordinary shares with par value of ₱40 per share. 2. XYZ's share capital consists of 3,000 ordinary shares with par value of ₱400 per share. Determine the fair value of consideration transferred on the business combination? 2. Using the same information in #1, a) how many shares were issued in the business combination? b) how much is the acquisition-date fair value per share? (two answers) 3. Using the information in #1, how much is the gain on acquisition or goodwill to be recognized? 4. Using the same information in #1, what is the retained earnings of the combined entity immediately after the business combination?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

1. Use the following information for the next five questions:On January 1, 2021, ABC Co. acquired all of the identifiable assets and assumed all of the liabilities of XYZ, Inc. by issuing its own ordinary shares. Information at acquisition date is shown below: (see image below) Additional information: 1. ABC Co's share capital consists of 60,000 ordinary shares with par value of ₱40 per share. 2. XYZ's share capital consists of 3,000 ordinary shares with par value of ₱400 per share. Determine the fair value of consideration transferred on the business combination?

2. Using the same information in #1, a) how many shares were issued in the business combination? b) how much is the acquisition-date fair value per share? (two answers)

3. Using the information in #1, how much is the gain on acquisition or goodwill to be recognized?

4. Using the same information in #1, what is the retained earnings of the combined entity immediately after the business combination? 

АВС Со
XYZ Inc
Combined
(carrying amounts) (fair values)
Identifiable assets
9,600,000
6,400,000
16,000,000
Goodwill
?
Total assets
9,600,000
6,400,000
?
Liabilities
2,800,000
3,600,000
6,400,000
Share capital
Share premium
Retained earnings
Total liabilities & equity
2,400,000
1,200,000
2,800,000
1,200,000
1,000,000
4,800,000
3,200,000
600,000
9,600,000
6,400,000
Transcribed Image Text:АВС Со XYZ Inc Combined (carrying amounts) (fair values) Identifiable assets 9,600,000 6,400,000 16,000,000 Goodwill ? Total assets 9,600,000 6,400,000 ? Liabilities 2,800,000 3,600,000 6,400,000 Share capital Share premium Retained earnings Total liabilities & equity 2,400,000 1,200,000 2,800,000 1,200,000 1,000,000 4,800,000 3,200,000 600,000 9,600,000 6,400,000
Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Consolidations
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education