Power Corporation acquired 70 percent of Silk Corporation’s common stock on December 31, 20x2. Balance sheet data for the two companies immediately following acquisition follow: Item Cash P Power 44,000 P Silk 30,000 Accounts Receivable 110,000 45,000 Inventory 130,000 70,000 Land 80,000 25,000 Buildings and equipment 500,000 400,000 Less: Accumulated depreciation (223,000) (165,000) Investment in Silk Corporation stock 150,500 Total Assets P 791,500 P 405,000 Accounts payable P 61,500 P 28,000 Taxes payable 95,000 37,000 Bonds payable 280,000 200,000 Common stock 150,000 50,000 Retained earnings 205,000 90,000 Total Liabilities and Stockholders’ Equity P 791,500 P 405,000 After the date of the business combination, the book value of Silk’s net assets and liabilities approximated their fair value except for inventory, which had a fair value of P85,000, and land, which had a fair value of P45, 000. The fair value of the non-controlling interest was P64,500 on December 31, 20x2. For each of the question below, indicate the appropriate total that should appear in the consolidated balance sheet immediately after the business combination on the basis of full-goodwill approach: 1. What amount of investment in Silk will be reported? A. P 0 C. P 150,500 B. P 140,000 D. P 215,000 2. What amount of liabilities will be reported? A. P265,000 C. P 622,000 B. P 436,500 D. P 701,500 3. What amount will be reported as non-controlling interest? A. P 42,000 C. P 60,900 B. P 52,500 D. P 64,500 4. What amount of consolidated retained earnings will be reported? A. P 295,000 C. P 232,000 B. P 268,000 D. P 205,000 5. What amount of stockholders; equity will be reported? A. P 355,000 C. P 419,500 B. P 397,000 D. P 495,000
Power Corporation acquired 70 percent of Silk Corporation’s common stock on December 31, 20x2.
for the two companies immediately following acquisition follow:
Item
Cash P
Power
44,000 P
Silk
30,000
Inventory 130,000 70,000
Land 80,000 25,000
Buildings and equipment 500,000 400,000
Less:
Investment in Silk Corporation stock 150,500
Total Assets P 791,500 P 405,000
Accounts payable P 61,500 P 28,000
Taxes payable 95,000 37,000
Bonds payable 280,000 200,000
Common stock 150,000 50,000
Total Liabilities and
After the date of the business combination, the book value of Silk’s net assets and liabilities approximated their fair
value except for inventory, which had a fair value of P85,000, and land, which had a fair value of P45, 000. The fair
value of the non-controlling interest was P64,500 on December 31, 20x2.
For each of the question below, indicate the appropriate total that should appear in the consolidated balance sheet
immediately after the business combination on the basis of full-
1. What amount of investment in Silk will be reported?
A. P 0 C. P 150,500
B. P 140,000 D. P 215,000
2. What amount of liabilities will be reported?
A. P265,000 C. P 622,000
B. P 436,500 D. P 701,500
3. What amount will be reported as non-controlling interest?
A. P 42,000 C. P 60,900
B. P 52,500 D. P 64,500
4. What amount of consolidated retained earnings will be reported? A.
P 295,000 C. P 232,000
B. P 268,000 D. P 205,000
5. What amount of stockholders; equity will be reported?
A. P 355,000 C. P 419,500
B. P 397,000 D. P 495,000
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