GREY Corp's statement of financial position prior to the acquisition is shown as follows: ASSETS LIABILITIES AND EQUITY Cash 170,000 Liabilities 50,000 Ordinary Share, P4 100,000 Share Premium 400,000 Accounts Receivable 80,000 Inventories 320,000 400,000 Property, Plant and Equipment 880,000 Retained Earnings TORRES Company will issue shares of P10 par value ordinary shares capital for all the assets and liabilities of GREY Company. As of acquisition date, TORRES Company's ordinary share capital has a current market value of P40 per share. The fair value of he current assets is P400,000 while that of the plant assets is P1,600,000. All the liabilities are correctly stated. TORRES Company issued sufficient share capital so that the fair value of the shares issued is equal to the fair market value of GREY Company's assets. To have goodwill of P200,000 the number of shares to be issued by TORRES Company should be

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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GREY Corp.

A. 40,000
B. 44,500
C. 36,000
D. 45,000

 

GREY Corp's statement of financial position prior to the acquisition is shown as follows:
ASSETS
LIABILITIES AND EQUITY
Cash
170,000 Liabilities
50,000 Ordinary Share, P4
100,000 Share Premium
400,000
Accounts Receivable
80,000
Inventories
320,000
Property, Plant and Equipment
880,000 Retained Earnings
400,000
TORRES Company will issue shares of P10 par value ordinary shares capital for all the assets and liabilities of GREY
Company. As of acquisition date, TORRES Company's ordinary share capital has a current market value of P40 per
share. The fair value of he current assets is P400,000 while that of the plant assets is P1,600,000. All the liabilities
are correctly stated. TORRES Company issued sufficient share capital so that the fair value of the shares issued is
equal to the fair market value of GREY Company's assets. To have goodwill of P200,000 the number of shares to be
issued by TORRES Company should be
Transcribed Image Text:GREY Corp's statement of financial position prior to the acquisition is shown as follows: ASSETS LIABILITIES AND EQUITY Cash 170,000 Liabilities 50,000 Ordinary Share, P4 100,000 Share Premium 400,000 Accounts Receivable 80,000 Inventories 320,000 Property, Plant and Equipment 880,000 Retained Earnings 400,000 TORRES Company will issue shares of P10 par value ordinary shares capital for all the assets and liabilities of GREY Company. As of acquisition date, TORRES Company's ordinary share capital has a current market value of P40 per share. The fair value of he current assets is P400,000 while that of the plant assets is P1,600,000. All the liabilities are correctly stated. TORRES Company issued sufficient share capital so that the fair value of the shares issued is equal to the fair market value of GREY Company's assets. To have goodwill of P200,000 the number of shares to be issued by TORRES Company should be
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