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IDEAL, who has the legal and economic entity, will issue 135,000 of its ordinary shares in exchange for the
acquisition of SUPERIOR and 67,200 of its ordinary shares in exchange for the acquisition of BRIGHT. The
fair value of IDEAL’s shares is P150. In addition, the following adjustments should be made to the current
assets of Superior and Bright which has a fair value of P2,700,000 and P1,380,000, respectively. The
noncurrent assets has a fair value of P12,900,000 and P11,850,000 for Superior and Bright, respectively.
Compute for the following balances in the books of the surviving company on the date of acquisition:
1. Stockholders’ equity
A. P25,050,000
B. P55,380,000
C. P53,070,000
D. P57,690,000
2. Assets
A. P61,740,000
B. P55,440,000
C. P55,830,000
D. P56,400,000
PROBLEM 2. The Statement of Financial Position of LUMINA Corporation on June 30, 2016 is presented
below:
Current assets P195,000
Land 1,320,000
Building 660,000
Equipment 525,000
Total Assets P2,700,000
Liabilities 525,000
Ordinary shares, P5 par 900,000
Share premium 825,000
Retained earnings 450,000
Total equities P2,700,000
All the assets and liabilities of Lumina assumed to approximate their fair values except for land and building.
It is estimated that the land have a fair value of P2,100,000 and the fair value of the building increased by
P480,000. Enigma Corporation acquired 80% of Lumina’s outstanding shares for P3,000,000. The non-
controlling interest is measured at fair value.
1. Assuming the consideration paid includes control premium of P852,000, how much is the goodwill/(gain
on acquisition) on the consolidated financial statement?
A. P315,000
B. P(750,000)
C. P102,000
D. P252,000
2. Assuming the consideration paid excludes control premium of P138,000 and the fair value of the non
controlling interest is P736,500, how much is the goodwill/(gain on acquisition) on the consolidated
financial statement?
A. P469,500
B. P439,500
C. P301,500
D. P448,500
3. Assuming the consideration paid includes control premium of P222,000, how much is the goodwill/(gain
on acquisition) on the consolidated financial statement?
A. P259,500
B. P439,500
C. P340,500
D. P410,100
PROBLEM 3. Great Company has gained control over the operations of Superb Corporation by acquiring
85% of its outstanding capital stock for P15,480,000. This amount includes a control premium of P180,000.
Acquisition expenses, direct and indirect, amounted to P498,000 and P252,000 respectively.
Great Superb
Book Value Book Value
Cash P21,249,000 P768,000
Accounts receivable 1,800,000 1,950,000
Inventories 3,300,000 2,160,000
Prepaid expenses 891,000 750,000
Land 14,100,000 5,274,000
Building 9,360,000 3,348,000
Equipment 1,800,000 1,110,000
Goodwill - 1,800,000
Total assets P52,500,000 P17,160,000
The following were ascertained on the date of acquisition for the Acquired Corporation:
The value of receivables and equipment has decreased by P150,000 and P84,000 respectively.
The fair value of inventories is now P2,616,000 whereas the value of land and building has increased
by P2,826,000 and P642,000 respectively.
There was an unrecorded accounts payable amounting to P162,000 and the fair value of notes is
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P4,428,000.
Compute for the following balances to be presented in the consolidated statement of financial position on
the date of business combination:
1. Total assets
A. P73,500,000
B. P60,558,000
C. P61,308,000
D. P76,788,000
A. P42,000,000
B. P45,000,000
C. P39,300,000
D. P40,050,000
PROBLEM 4. On January 2, 2016, the Statement of Financial Position of Arden Company and Wonder
Company immediately before the combination are:
Arden Co. Wonder Co.
Cash P 2,700,000 P 90,000
Inventories 1,800,000 180,000
Property and equipment (net) 4,500,000 630,000
Total Assets P 9,000,000 P 900,000
1. Assuming Arden Company acquired 80% of the outstanding shares of Wonder Company for
P820,800 and non-controlling interest is measured at the proportionate share of Wonder
Company’s identifiable net assets, how much is the consolidated stockholder’s equity on the date of
acquisition?
A. P8,460,000
B. P8,517,600
C. P8,679,600
D. P8,737,200
2. Assuming Arden Company acquired 90% of the outstanding shares of Wonder Company for
P1,458,000 and non-controlling interest is measured at fair value, how much is the total
consolidated assets on the date of acquisition?
A. P9,252,000
B. P10,710,000
C. P10,422,000
D. P8,964,000
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