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Mendez Corporation concluded that the fair value of Helyar

Company was 80,000 and paid that amount to acquire all of its
net assets. Helyar reported assets with a book value of 60,000
and fair value of 98,000 and liabilities with a book value and fair
value of 23,000 on the date of combination. Mendez also paid
3,000 to a search firm for finder’s fees related to the acquisition.
What amount will be recorded as goodwill by Mendez
Corporation?

a. 0 c. 8,000
b. 5,000 d. 13,000
B. 5,000

Consideration Transferred (fair value) 80,000


Less: Fair Value of net identifiable assets acquired:
Fair Value of Assets 98,000
Less: PV/FV of liabilities 23,000 75,000
Goodwill 5,000
On June 1, 2016, Cline Company paid 800,000 cash for the assets and liabilities of Renn
Corp. The carrying values for Renn’s assets and liabilities on June 1, 2016 follow:
Cash P150,000
Accounts Receivable 180,000
Capitalized software costs 320,000
Goodwill 100,000
Liabilities (130,000)
Net Assets P620,000

On June 1, 2016, Renn’s accounts receivable had a fair value of 140,000. Additionally,
Renn’s in-process and development costs was estimated to have a fair value of
P200,000. All other items were stated at their fair values. On Cline’s June 1 balance
sheet. How much is reported for goodwill?

a. 320,000
b. 120,000
c. 80,000
d. 20,000
B. 120,000

Consideration transferred (FV) 800,000


Less: Fair value of net identifiable assets acquired:
Cash 150,000
Accounts Receivable 140,000
Software 320,000
In-process R&D 200,000
Liabilities (130,000) 680,000
Goodwill 120,000
On July 1, 2015, the Magi Company acquired 100% of the Nato
Company for a consideration transferred of P160 million. At the
acquisition date the carrying amount of Nato’s net assets was P100
million. At the acquisition date of provisional fair value of P120 million
was attributed to the net assets. An additional valuation received on
May 31, 2016 increased this provisional far value to P135 million and
on July 30, 2016 this fair value was finalized at P140 million. What
amount should Magi present for goodwill in its statement of financial
position on December 31, 2016, according to PFRS 3 Business
Combinations?

a. 20 million c. 20 million
b. 25 million d. 60 million
On January 1,2013, CJ Corporation acquired the net assets of Re, Inc.,
by issuing 600,000 shares of its P10 par value common stock.
Subsequently, Rex was liquidated and its assets and liabilities merged
into CJ Corporation. CJ’s stock was selling for P50 per share on
January 1,2013. The amount of goodwill recorded by CJ in connection
with the combination was P6,120,000. CJ incurred P300,000 of legal
and broker’s fees associated with the combination and P30,000 of
stock issuance costs.

What is the fair value of Rex’s net assets and the amount of the
increase in CJ’s stockholders’ equity as a result of the combination,
respectively?

A. P23,880,000 and P30,000,000


B. P24,180,000 and P30,000,000
C. P24,180,000 and P29,970,000
D. P23,880,000 and P29,970,000
D P23,880,000 and P29,970,000

Price paid (600,000 shares x P50) P30,000,000


Less: Goodwill recorded 6,120,000
Fair value of net assets acquired P23,880,000

Capital Stock issued (600,000 shares x P10) P6,000,000


APIC (600,000 shares x P40) – P30,000 23,970,000
Increase in CJ’s equity P29,970,000
MM Company issued its common stock for the net assets of PP
Company in a business combination treated as acquisition. MM’s
common stock issued was worth P1,000,000. At the date of
combination, MM’s net assets had a book value of P1.2 million and a
fair value of P1.6 million; PP’s net assets had a book value of P650,000
and a fair value of P800,000. Immediately following the combination,
the net assets of the combined company should have been reported at
what amount?

A. P3,000,000
B. P2,200,000
C. P2,000,000
D. P1,850,000
B. P2,200,000

Price paid P1,000,000


Less: Fair value of identifiable assets acquired 800,000
Goodwill P 200,000
MM’s net assets at book value 1,200,000
PP’s net assets at fair value 800,000
Total assets after combination P2,200,000
Astro Corporation purchased the net assets of Bistro Corporation for
P160,000. On the date of the purchase, Bistro Corporation had no long-
term investments in marketable securities. The liabilities of the corporation
amounted to P20,000.
The marketable values of its assets were:

Current Assets P80,000


Noncurrent Assets 120,000
Total 200,000

The noncurrent assets and goodwill (income from acquisition) acquired


should be recorded at:
(Income from Acquisition)
Noncurrent Assets Goodwill
A. P120,000 P(20,000)
B. P100,000 P 0
C. P140,000 P100,000
D. P150,000 P 0
A. 120,000; (20,000)

Price paid P160,000


Less: Fair value of net identifiable assets acquired:
Current assets P 80,000
Non-current assets 120,000
Liabilities ( 20,000) 180,000
Income from acquisition P(20,000)
Non- current assets P120,000
When White Company acquired Black Company’s net assets by issuing its own
capital stock, it had the following acquisition-related costs:

Broker’s fee P50,000


Pre-acquisition audit fee 40,000
General administrative costs 15,000
Legal fees for the combination 32,000
Audit fee for SEC registration of stock issue 46,000
SEC registration fee for stock issue 5,000
Other acquisition costs 6,000

The acquisition-related costs should be debited to the following accounts:


Expenses Additional paid-in capital
A. P143,000 P78,000
B. P21,000 P51,000
C. P143,000 P51,000
D. P11,000 P5,000
c. P143,000; P51,000
Debit to expenses:
Broker’s fee P 50,000
Pre-acquisition audit fee 40,000
General administrative costs 15,000
Legal fees for business combination 32,000
Other acquisition costs 6,000
Total P 143,000

Debit to APIC
Audit fee for SEC registration of stock issue P 46,000
SEC registration fee for stock issue 5,000
Total P 51,000
On April 1, 2013, the Rolex Company paid P600,000 for the net assets of
Seiko Company in a transaction properly accounted for as acquisition. On
this date, the assets and liabilities of Seiko Company were as follow:

Cash P60,000
Merchandise Inventory 180,000
Plant Assets (net) 360,000
Liabilities 135,000

Furthermore, it was determined that the merchandise inventory of Seiko


Company had a fair market value of P142,500 and the plant assets of
P420,000. What should be the amount recorded as goodwill by Rolex
Company as a result of the business combination?

A. P 0
B. P37,500
C. P112,500
D. P112,000
c. P112,500
Price paid P600,000
Less: Fair value of identifiable assets acquired:
Cash P 60,000
Merchandise inventory 142,500
Plant assets (net) 420,000
Liabilities (135,000) 487,500
Goodwill P112,500