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MANII-A
stY
I ffi.lEsus I
IJM
II
BUSINESS COMBINATION
DATE OF ACQUISITION
trRRER
PROBLEM 1.
STARCorporaticnisaCompi]n),invclvedinmanufactLtringcars,onJanuaryl,20l3,theboardofdirectors
and RISE Corporation'
of tire said company has deci,:1eci to acqLrire the net asieis of l',lovA Corporation
to result in producing higher quality
suppliers of materials they Lrss in prorluctir.rn. The merger is expected
cars with lower total cost
was gathered from the books of
The deal was clo:ecl on i.ebruary 29,2073 anci the following information
the entilies:
I
I
,{
NOVA
,G'il
- ,t1P,,0:F
-o-i.lu=ipp[l-t:rjplql
:;zi,pq0 , 2rss0,0rc i 14!pq!,1
Liabilities
Liabilities
RISE
r,.stE'Xo
L-Ptj!,-0-0q- e! oqo.oo-q
n{ rn nnn
jlt-,'!.!!!-"
-_---_l_-
r-Il^i11"-"-l
?qq i--1-1ry,99?]
wqc -*,(41!2u-W-1-=r*- -- : r/e,5oq
@
:il.-t:.:.'. L.
&d{letel-8!id-i! Gp1al
= -- .1-9?.P91 s2opqoj
lll-1?l
L1yy,ly,t?_t_:t",1,
I Retaineci
earninqs
. ----j.: :
l,25u.ooo
---1,1s-0,
_ _ zll.".u i . _
.
"
Current assets of liluva ancj Risc have a fair value of tr450,000 and P230,000 respectiveiy'
Rise, respectively'
Noncurrent assets nlve a fair value of P2,150,CCO arid P1,9/5,000 for Nova and
Ccmpute for the folio'win! balances of Star Compan;'on ihe date oi acquisition:
Stockholders'equlty
A.
B.
c,
D.
P6, 118,5Ci-)
P7.980,00i'
P3,496,500
P9,615,000
Assets
A. P10,290,000
B. P9,240,000
c. P10,500,000
D P9,840,000
PAT-7400
?aEc-
PR,OBLEM 2.
Denim Co. merged into Kraft Corp, on July 1, 2013. In exchange for the net assets at fair market value of Denim
Co. amountirrg to P696,450 , Kraft issued 68,000 common siiares at P9 par value with a market price of P12 per
share.
i-grot-e-rtree--
1s:qe
____
L@ition
ceneiJi ancl allocateilqxpsdiqr
@e'-.r-
--:
- _-.1_i__LlPqgl
-[-
,-----
-f.l,ppp
;;Pqo-.
-l -
Denim rvill pay an adrJitionai cash consideration of P455,000 in the event ti,at Kraft's net income will be equal or
greater than P950,Ct00 for the period ended December 31, 2013. At acquisition date, lhere is a high probability of
ieaching the target qet income ancJ the fair rralue of the acJdilional consicJeratiolt ',vas determined to be P195,000.
Actual net incrme ior the period end:d Decembei-31,20i3 amounted to P1,250,J00. The additional cash
consideration was paid,
20t3?
A. P295,450
B. P3OB,5CG
c, P314,550
D,
P326,550
What is the amount of expense to be recogttized rn ihe statel[ent ci"ic:lipiefiefisive income for the year
ended December
A.
B.
c,
D.
3i,
2013?
P257,240
P517,244
P307,4llc
P412,500
PROBLEM 3.
On October L, 7-913, Winner Corporation acquired all i.ne clSS;rr Sird asbri:ned all the liaoriities of Getter
Company by rssr.ring 20,000 snares rryith a fair vllr"re of Pc7 5 oer sliirl'e and an obligation to pay a
contingent consideration wiih a fair value of P750,000,
P{\"**740C
YaqeZ
and Getter, togelher with the fair
The Statement of i:inencial position as of September 30, 2013 of Winner
market value of the assets un6 116[ililies are presenled below:
l1J,f
't@--l-gggf
iffi,r*.a,vabte -l---:ooxoo f
/uuuu'
33s.ooc
33s,00c I _--70,000
-!-1q00
- --7aooI
--7g
t- -:;ffi0
-:=ffin-l--_.-;7ono"i
airc-o"r
l-Llrvetqlqe,
-J- l.:.q!! ;tlrr,;;3i3
rlisausxp-s,rer- - ; uooo'oo0 [.-,
33]
;H
e00/0qq--l!lg.uuy
;;;;,
2q00'00J1
2,900,00!l
I
z,ooo,ooo
fE!g_--:-- -=t I gqop*
--9!!Iqq --l!lg.ur
ioaqop
_Jl;;aqa
[L - i:]*:
r99,qr!-]
I suirdinq
!q0l_0r,_t_-,I99,qr!_]
i--[f_:___. . __--_---l----,-;1ffi
l;;,3$
)'1'uuu
OOO
19aqo!ffi-ffi,___:--l---_z_oqgqql-H*1---leqpry
-z;.qqo
qdluL- --- -l---,--.-i-*--i-Ps,000,000"t - . -:l -.:90'00! l-^-Ptr50,000 L-Pa!!9000 I P2'860'009
rotar acsetc
Tg!9]_e5e_1":.=___
|ri tr5,guu/uuu+-8l-?UqU
Notes
qJqI-itr
00_q!!o_
stork 50
I pqg_iLqgp tel
Retainecl earni
Total equities
n{d
!_c1!rl
_B_S.qqq.
400,000
L!!!pQO_i
liq,0qq"
750,000
P!,0_0_ql0!
_L
e2,sqE-o_o_q
Retained earnings
A. P480,000
B. P540,000
c.
P526,000
D. P475,000
Total assets
P7,015,000
P6,980,000
C.
P7,1 18,00C
A.
P7,491,000
PROBLEM 4,
presented below:
The Statement of Financial Position cf Luster Co;-poration cn June 30, 2013 is
Current assets
Land
Equ
building'
PA2-7+o(
bY
?"g.
Assuming the consideration paid irrcludes contro! premium of P142,000, how much is the goodwill/(gain
on acquisition) on the consolidated financiai statement?
A.
B,
c.
D,
P60,000
P48,000
P42,000
P50,000
78,250
P73,254
B.
C.
P69,500
D,
P74,750
Assuming the consideratiorr paid includes control Drerniunr cf P37,000, hotv rnuch is the gor:'Jwill/(gain
on acquisition). on the consclidated financial statenrent?
A.
B.
c.
D.
P43,250
?73,250
P56,750
P68,350
PROBTEM 5.
tsetter Company has gainect conlrol cver the operatii:ns r:f Calnr Corocration ily acouiring B5olo of its
outstanding capital stoik for p2,580,00C. This arnorrnt includes a contrcl prerrium of P30,000. Acquisition
expenses, direct and indirect, amounted to P83,0C0 and 42,0C0 respectivelv
..-|
Better- i
Caim
_j
i
qpel* ilg_e *Ee+
Vdue_:
^\:..+: r[?ir *-?l-zq.-oo!:lEqrL
--f-:fuQol@ll1-sq'yeuLe--- -]- ---lq-,r,0gc[ -'r5pqq, - - I 5.s!,0c9 - 150,00!
Irtyeltgriel
ri
: E-,iv lfrlrrr-
6- ^t. tr.-1..^
qurqu---_*
qqulPrnenl
- -:
___ i
ECd*rL _ __
Iolgi qs_sg!:
l-----,--.-li
LAligllls pgyaple_ _ __
lI-
I
,
+_
par- I-
:-"'::-r:l-::=--*Nqtls-psv!q!e---
a -!r_^
'r,1n
{)-,.1
/',rlil
'
l,soO,qooi- 5c,tgo;
:oo,ooo
_.iuuruuu
Ii__
i85,1,00
__575,000
..
!.9.,.,-'YY,l
ihn'r,rvr
3o_o,cooI
___
Pq,7s0r!q0
:
---
J2,8i0,00!
--li
i
i
Zp3p]q :-- -l
- - 130rqW-1,--- --
_--i,tqq,-o-q0-1
: ='----.
II -----J-i--
capital stock,
50
_
.--.-t
;L_:-r'-:_-t.-_-j_.-__ _._!()(l.Oqq_
--:-',
-- r11 _____=l_-- J,tq.c,,.:_o!_
!spi!ei:!9"9!,Ee--)--'-zlq-c,'i-0!-;---!ry.qqq-i
-.---paici in capital
1,575,00C ;i
Additional paio
caoital 1,575,000
I Rdditlonat
_ tr00,000
I
'lJC,0.!! - --
_ --l
- -I
Sit,tag ._
i_Belq49d_eernilgs____l . _1,2,]_q,8qQ
- i
Pj,ZsQ,0!o-L
t-I Total equ!t1e9
-8,9-bo,;O
i
'
The following was ascertained on the date cf acquisiticn for Calm Corporation:
. The value of receivables and equipmeni has decreased by P25,000 and P1,4,000 respectively.
. The fair value of inventories is riow P43ti,000 whereas the valire of lancl and building has increased by
.
io
of notes
[eA&_"F*0c
logc
Total assets
A. P9,875,000
B. Pi0,093,000
c.
P10,112,000
D,
P9,215,000
A. P7,000,000
B. P7,500,000
c.
P8,200,000
D, P8,000,000
PROBLEM 6.
prior to the
On January 2, 7A13, the Statement of Financial Position of Pepper and Steak Company
cornbination are:
Cash
Inventories
Property and eqr"riPment (net)
lotalAssets
Current LiaLrilities
Common Stcck, P100 Par
Additiorral Paid in CaPital
Retained Earnings
Total Liabilities and Stockholder's Equity
'The
Pepper Co.
P 450,000
300,000
z5a,-Qaa
P_!J!!e9B
P 90,000
Steak Co.
15,000
30,000
u5-0!q
g.$.'Q,000
15,000
150,000
450,C00
B1o,0o0
I 5,000
30,000
90,000
LLSog!0Q
L15.9*gqQ
@ependentcases:
A
for
1, Assuming pepper Company acquired TOoic of the outstanding commort stock of Steak Company
the
is
much
p105,000 and Non-controlling interest is measurec at fair value of P61,000, how
goodwill (gain on acquisition)?
A, P(17,000)
B, P17,000
c. P23,100
D,
P(23,100)
2. Assuming pepper Company acquired B0% of lhe outstanding commorl stock ol Steak Company for
p136,800 and Non-controlling interest is i-neasurecl at Non-controliing interest's proporlionate share
of Steak Company's identifiatle net assets, how much is the consolldated stockholder's equity on
the date of acquisition?
A.
B.
c.
D.
3,
P1,41-0,000
P1,419,600
P1,446,600
P1,456,200
for
Assuming pepper Company acquired 90o/o of the outstanding common stock of Steak Company
A,
B.
c,
n
P1,542,000
P1,785,000
PL,737,000
D1 4A4 nr)n
PA2-72/o/
?age
PROBLEM 7.
25o/o
i25,000.
How much is the goodwill or (gain on acquisition)
A.
B.
P(17,000)
P250,000
c.
P(30,000)
D.
P263,000
PROBLEM 8.
Condensed statements of financial position
as follows:
Current assets
Noncurrent assets
Total assets
'i LlaDllltlgs
iiabitities
)trn
D
IO/Z)U
---L
I fP 16,250
_t r
.
t
aTqn
oLt
rw
_.
qo_ -Ll-B.ZIq
_: _7?,_?o-o_
- - i - =^E2:9
i- r?-'-co
A!9rlip@-!.7-s-o-=--L---q?J!!
i Belcllgd-gglllrrgs
- -]
ZOl3, Care Corp. issued 8,750 stocks',ryith a market value of PZ5lshare for the assets
and liabilities of Charm Corp. the book value rerlects lhe fair value of the assets and liabilities,
that the noncurrenl assets of Cnarm has a temporary appraisal of P157,500 and the
On January
l,
except
noncurrent assets
of
On March 1,2013 the contingent considei-ation has a determinable amount cf P5,000. On June
2013, the provisional fair value of the noncurren[ assets of Charm increased by P2,250.
B,
C.
D,
P435,500
P443,000
P442,000
P444,250
?A2*71ob
-tl
1,