REQUIREMENTS: A. Consolidated Total Assets at the date of acquisition B. Consolidated Equity at the date of acquisition

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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If CARDO Co purchases the net assets of SYANO Co by issuing 4,000 shares of their P10 par value shares with a fair value of P35 per share, a P40,000 direct cost and a P50,000 stock issue cost however remain unpaid. The companies also agreed on the following:

  • CARDO guarantees the prices of there stocks and promises to pay the peso decline in their
    shares within one year.
  •  CARDO Co promises to pay the stockholders of SYANO Co an additional P100,00 if the net income of the company in the next year will be more than P500,000.
  • CARDO estimates that there is an 80% probability of achieving the target income.

REQUIREMENTS:
A. Consolidated Total Assets at the date of acquisition
B. Consolidated Equity at the date of acquisition

The following balances were taken from the trial balance of CARDO Company and SYANO Company at the
start of the fiscal year 20x7:
CARDO COMPANY
Book Value
Fair Value
Book Value
Fair Value
Cash
Accounts Receivable
Accounts Payable
P450,000
200,000
P500,000
250,000
155,000
600,000
P500,000
240,000 Mortgage Payable
200,000 Ordinary Shares
520,000 Retained Earnings
P440,000
220,000
LO
595,000
260,000
Inventory
Fixed Assets (Net)
SYANO COMPANY
Book Value
Fair Value
Book Value
Fair Value
Accounts Payable
P350,000
200,000
250,000
175,000
P340,000
220,000
Cash
P300,000
150,000
125,000
400,000
P300,000
160,000 Mortgage Payable
100,000 Ordinary Shares
420,000 Retained Earnings
Accounts Receivable
Inventory
Fixed Assets (Net)
RS
Transcribed Image Text:The following balances were taken from the trial balance of CARDO Company and SYANO Company at the start of the fiscal year 20x7: CARDO COMPANY Book Value Fair Value Book Value Fair Value Cash Accounts Receivable Accounts Payable P450,000 200,000 P500,000 250,000 155,000 600,000 P500,000 240,000 Mortgage Payable 200,000 Ordinary Shares 520,000 Retained Earnings P440,000 220,000 LO 595,000 260,000 Inventory Fixed Assets (Net) SYANO COMPANY Book Value Fair Value Book Value Fair Value Accounts Payable P350,000 200,000 250,000 175,000 P340,000 220,000 Cash P300,000 150,000 125,000 400,000 P300,000 160,000 Mortgage Payable 100,000 Ordinary Shares 420,000 Retained Earnings Accounts Receivable Inventory Fixed Assets (Net) RS
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