.24 Subsidiary Company had common stock of P350,000 and retained earnings of P490,000. Parent Inc.had common stock of P700,000 and retained earnings of P980,000. On January 1, 2021, Parent issued26,000 shares of common stock with a P12 par value and a P30 fair value for all of Subsidiary'soutstanding common stock. Acquisition related cost such as legal fees and finder's fees amounted toP150,000. This combination was accounted for as an acquisition. Immediately after the combination,what was the consolidated net assets?

Given Subsidiary Company Retained Earning = P490,000 Parent Inc. Retained Earning = P980,000 Total…

Answered: Subsidiary Company had common stock of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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P Company acquired all the outstanding shares of S Company by issuing 50,000 shares with a par value of P100 on July 1, 2021. P's ordinary shares were selling at P102 per share at the date of acquisition. On the same date, the net asset of S had a carrying value and fair value of P3,800,000 and P4,500,000 respectively. Out of pocket expenses of the business combination were as follows (see image below). How much is the amount charged to expense? Legal fees for contract of business combination Audit fees for SEC registration of share issue Brokerage fee Accountant fee for pre-acquisition audit Printing and registration of stock certificates Other direct costs of acquisition 41,200 50,000 22,500 35,000 10,000 16,800 General administrative costs 25,000 12,100 Listing fees in issuing new shares
Subsidiary Company had common stock of P350,000 and retained earnings of P490,000. Parent Inc. had common stock of P700,000 and retained earnings of P980,000. On January 1, 2021, Parent issued 26,000 shares of common stock with a P12 par value and a P30 fair value for all of Subsidiary's outstanding common stock. Acquisition related cost such as legal fees and finder's fees amounted to P150,000. This combination was accounted for as an acquisition. Immediately after the combination, what was the consolidated net assets?
On January 1, 2020, Elite Company paid P 18,000,000 for 50,000 ordinary shares of Craze Company which represent a 25% interest in the in the net assets of Craze. The acquisition cost is equal to the carrying amount of the net assets acquired. Elite has the ability to exercise significant influence over Craze. Elite received a dividend of P35 per share from Craze in 2020. Craze reported net income of P9,600,000 for the year ended December 31, 2020. In the December 31, 2020 statement of financial position, what amount should be reported as investmentin Craze Company?a. 22,150,000b. 20,400,000c. 18,650,000d. 18,000,000
On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado Ltd. The costs of issuing the shares by Quick Buck Ltd cost $1,600. At this date the statement of financial position of Eldorado Ltd was as follows: Carrying amount Fair value Machinery $ 40,000 $ 67,000 Fixtures & fittings 60,0000 68,000 Vehicles 35,000 35,000 Current assets 10,000 12,000 Current liabilities (16,000) (18,000) Total net assets $ 129,000 Share capital (80,000 shares at $1.00 per share) $ 80,000 General reserve 20,000 Retained earnings 29,000 Total equity 129,000 Required:Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition.
On January 1, 2021, LISAYAH LTD. acquired 70% of outstanding ordinary shares of JICHU INC. at aprice of P210,000. On the same date, the net assets of JICHU INC. were reported at P260,000. OnJanuary 1, 2021, LISAYAH LTD. reported retained earnings of P2,000,000 while JICHU INC. reportedretained earnings of P200,000.All the assets and liabilities of JICHU INC. are fairly valued except machinery, which is undervaluedby P80,000 and inventory which is overvalued by P10,000. The said machinery has remaining usefullife of five years while 40% of the said inventory remained unsold at the end of 2021.For the year ended December 31, 2021, LISAYAH LTD. reported net income of P1,000,000 anddeclared dividends of P200,000 in the separate financial statements while JICHU INC. reported netincome of P150,000 and declared dividends of P20,000 in the separate financial statements. LISAYAHLTD. accounted the investment in JICHU INC. using cost method in the separate financial statements.…
On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltdissued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of EldoradoLtd. The costs of issuing the shares by Quick Buck Ltd cost $1,600.At this date the statement of financial position of Eldorado Ltd was as follows: c Carrying amount Fair valueMachinery $40,000 $67,000Fixtures & fittings 60,000 68,000Vehicles 35,000 35,000 Current assets 10,000 12,000Current liabilities (16,000) (18,000)Total net assets…
On December 31, 2020, Naengmyeon Company, an entity with no subsidiary, purchased 10,000 ordinary shares from Bibim Corp. at P150 per share. At the time of purchase, Bibim has an outstanding 50,000 shares with a total shareholders’ equity of P7,500,000. For the year 2021, Bibim reported a profit of P3,000,000. On December 30, 2021, Naengmyeon received a cash dividend of P50 per share. What is the carrying value of the investment at December 31, 2021? a. P1,600,000 b. P2,100,000 c. P1,500,000 d. P2,600,000
P Company acquired the net assets of S Company by issuing 150,000 shares of its P10 par value ordinary share capital on July 1, 2021. The market value of the shares was P12. P also paid direct costs of P100,000 which includes P15,000 cost of issuing and registering new shares. The financial statements of P and S were (see image below). The fair value and book value of S Company's identifiable assets and liabilities were the same except Equipment which was undervalued by P250.000 and lInventory which was overvalued by P100,000. Assuming that P Company is an SME. How much is the goodwill/gain on bargain purchase? " P S Cash Inventory Equipment Other Assets 150,000 320,000 4,350,000 500,000 5,320,000 120,000 400,000 1,750,000 500,000 2,770,000 Total Accounts Payable Notes Payable Share Capital, P10 par 1,000,000 1,300,000 2,000,000 1,000,000 20,000 5,320,000 300,000 660,000 500,000 100,000 1,210,000 2,770,000 Share Premium Retained Earnings Total
On July 1, 2019, GAR Company acquired 800,000 shares of FAR Company at a price of P13 per share. GAR estimated that the price paid include P1.50 premium in order to gain control over FAR Company. On this date, the fair values of FAR Company’s identifiable assets and liabilities and their carrying values are given below: Book Value Fair ValueCurrent assets P2,000,000 P2,000,000Property, plant and equipment 9,000,000 11,000,000Liabilities P3,000,000 Ordinary shares, P5 par 5,000,000 Retained earnings 3,000,000 Determine the amount of goodwill assuming the non-controlling interest is measured at the proportionate share in the net assets:
On January 1, 2021, Manette Company acquired 100,000 ordinary shares of Nette Company for P6,000,000. At the date of purchase, Nette had 500,000 outstanding ordinary shares and shareholders' equity of P20,000,000. During the year 2021, Nette reported profit of P1,000,000 and declared and paid cash dividends of P1.50 per share. The fair value of Nette's share at December 31, 2021 was P68. What amount shall Manette Company recognize in profit or loss for the year 2021 if it is able to exercise significant influence over Nette Company as a result of the acquisition? A P950,000 B) P200,000 P350,000 P150,000
On January 1, 2021, Eoeo Company acquired 16,000 shares of Fofo Corporation for P1,500,000. Commissions paid on the acquisition amounted to P15,000. Commission paid on the acquisition amounted to P15,000. On December 31, 2021, the market value per share of Fofo Company is P90. On December 31, 2022 the market value per share of Fofo's stock increases to P110. Required: Prepare all the necessary entries on 2021 and 2022 assuming the investments is 1. Financial Assets at Fair Value through Profit or Loss 2. Financial Assets at Fair Value through other Comprehensive Income
On January 1, 2023, Tamarisk Company issued 1,450 of its $20 par value common shares with a fair value of $60 per share in exchange for the 2,000 outstanding common shares of Sheffield Company in a purchase transaction. Registration costs amounted to $2,500, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Cash Accounts receivable (net) Inventory Plant and equipment (net) Land Total assets Accounts payable Notes payable Common stock, $20 par value Other contributed capital Retained earnings Total equities Tamarisk Company $83,000 103,000 56,000 95,000 23,500 $360,500 $63,000 89,500 100,000 60,000 48,000 $360,500 Sheffield Company $12,600 18,000 25,000 46,500 22,000 $124,100 $19,500 30,000 40,000 27,500 7,100 $124,100 Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.

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