The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each valued at $1.50. The summary statement of the financial position of the subsidiary company immediately following the acquisition is: Fair value of assets acquired Fair value of liabilities acquired Total shareholders' equity of the subsidiary company Retained earnings of the subsidiary company $2,640,000 $720,000 $800,000 $1,120,000 Required: (a) Pass the necessary journal entry to record the acquisition .. (b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company, (d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50 .

Visno

On January 1, 20x8, Parent Company purchased 80% of the outstanding shares of Subsidiary Company for P800,000. On the date of acquisition, Subsidiary Company reported Ordinary Shares of P800,000 and Retained Earnings of P200,000. Subsidiary’s Inventory was understated by P20,000; Equipment with a 5-year life was understated by P20,000, Building with an 8-year life was understated by P80,000 and land was understated by P40,000. The non-controlling interest is to be stated at fair value and the fair value of the non-controlling interest on January 1, 20x8 is P210,000. During the year, Parent sold goods to Subsidiary for P150,000 at a 25% mark-up and in turn purchased P200,000 of Subsidiary’s goods which Subsidiary sold at a 20% mark-up. From the goods purchased, P50,000 remain in Parent’s books at the end of the year, while P20,000 remain in Subsidiary’s books at the end of the year. 30% of the undervalued inventory of Subsidiary still remain unsold by the end of 20x8. The following are…

What is the amount of pre-acquisition earnings on the acquisition date consolidated income statement if the parent acquires 90 percent of the subsidiary’s stock and the following income statement accounts exist at the acquisition date?                                                     Parent                   Subsidiary Sales                                       P250,000                     P60,000 Cost of Goods Sold                120,000                       12,000 Depreciation Expense            10,000                         5,000 Operating Expenses                40,000                         8,000 Income Tax Expense                32,000                       14,000     2. Using the same information in No. 1, what is the imputed value of a subsidiary if the parent pays P56,000 for 80 percent of the subsidiary’s stock? Use the following information for question 3 and 4: Marksman acquired 100 percent of Tribal Transit for P275,000.  At the date of acquisition, Fast Transit…