Business Conbinshion eee, u tits y SE AEW schoo. or THe PHILippiNes MANILA ADV! ACQUSITI SED FINANCIAL ACCOUNTING & REPORTING ITION OF NET. D, ‘ASSETS AND ACQUISITION OF STOCKS GUERREROIGERMANIDE JESUS IMMFERRER/LACOWALIX PROBI eee ae 1. IDEAL Corporation is @ company involved in manufacturing mining equipment. At fuiness combination with SUPERIOR Corporation and BRIGHT Consent’ woe Seno ct cater cae ie aera aaey which they use in production. The said acquisition is expected to producing higher guaity mining equipment wih ewer lol oats del dee Sa February 28, 2016 and the following information was gathered from the books of the ent Sted 0 SUPERIOR [ Gumenn assets Ronin — BEE oo Noncurrent asses TET Total asset _ 7640, 00 | Liabilities | ris 00:! rian | Pea; ‘Ordinary shares rc 191,000 81,200 [7,120,800 Share premium = 1,059,000 1g 3001 675.2007 elained earnings 7,500,000 |__ 4,680,000 3,120,000 Total equities _ “{ Pz: 100. P 000 | Pi1.760,000 GES, 4m BR: aon Cr =e=e_——— for the acquisition of SUPERIOR ange 00,0 its ordinary shares in exchange for the acquisition of BRIGHT. The fair val f IDEAL ’s'sI ayes ts P150. In addition, the following adjustments should be made to the current assets of Superior and Bright which has a fairwalue of P2,700,000 and P1,380,000, respectively, The noncurrent assets has a fair value of P12,900,000 and P1 1,850,000 for Superior and Bright, respectively. Compute for the following balances ins the books of the surviving companyon the date of acquisition: 1, Stockholders’ equity A_,25,050,000 2B. 55,380,000 C. 53,070,000 D. 57,690,000 2, Assets 6 61,740,000 * ‘B. 55,440,000 C. 55,830,000 D. 56,400,000 8019: Page 2 PROBLEM 2. The Statement of Financial Position of ation on June is ee ition of LUMINA Corporation on June 30, 2016 is [Current assets Land Equi Total Assets Liabilities ‘Ordinary shares, {Share premium {Retained earings All the assets and liabilities of Lumina assumed to approximate their fair values except for land and building. Iti estimated that the land have a fair value of P2,10,000 and the fair value of the buifding increased by P480.000. Enigma Corporation acquired 80% of Lumina’s outstanding shares for 3,000,000. ‘The non-controlling interest is measured at fair value as 3495 RO ate Hel = ORO ‘Assuming the consideration paid includes control premium of P852,000, how much is the ‘goodwill/(gain on acquisition) on the consolidated financial statement? A. 315,000 B. (750,000) C. 102.000, D. 252,000) 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. 469,500 B. 439.500. C. 301,500 D. 448,500 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. 259,500. B. 439,500 C. 340,500 D. 410,100 8019PROBLEM 3, Acquiring B50 Pp Premium of P180,09 Tespectively, —” Page 3 vfs epost Supe Cupean by SEE rn ne aoa iP | Accounts receivable Inventories [Prepaid expenses ——~ bole Land _ aan 300 | sree Building — sant uipment ode | Goodwith Total assets O00| pay Asia ‘Accounts payable 518,000 | Weider ‘Notes payable - 8,400,000 1.380,000 | 442200 Ordinary shares, 50 par = F20,400,000 [~~ 4:800,0007) yg Lxete¥sm [Share premium — ~9.450,000 [~ { Retained earnings s 10.200.000 2,862,000} PIs # 442 ero {Total equities —___ [52,500,000 17,160,000 | jop NO = WA4K40 Gu > 5,240,008 ‘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 are now P2,616,000 whereas the value of land and building have 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 4,428,000. Compute for the following balances to be presented in the consolidated statement of financial position on the date of business combination: 1, Total assets 73,500,000 60,558,000 61,308,000. 76,788,000 pomp 2. Total shareholder's equity A. 42,000,000 B. 45,000,000 CC. 39,300,000" D. 40,050,000 8019Page 4 PROBLEM 4,0n J On January 2, 2016, the Statement of Fit ‘Wonder Company immediatly beter the combination aes nn Arden Company and ca nance Wein Inventori a0 erate Tens 900.000 180,000 Roper end enpment (nt) 4 500,000 $30,000 bin sees 9.000.000 PD0000 Py A+ Les ‘Current Liabilities Pp 40,000 90,000 Ordinary shares, P100 par 00.000 0,000 Stare pein 2.700.000 180,000 oad acaga eas. 540,000 otal Lisilities and Stockholder's Equity 9,000,000 900,000 Ae ee (at) ait ‘The fair value of Wonder Company's equipment is P918,000. aie Oy ‘Assume the following independent cases: |. Assuming Arden Company acquired 80% of the outstanding shares of Wonder Company for 820,800 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’ WP aie Se We ig meanned @ Ma mannan # A. 8,460,000 B. 8,517,600 C. 8,679,600 D. 8,737,200 2, Assuming Arden Company acquired 90% of the outstanding shares of Wonder Company for 1,458,000 and non-controlling interest is measured at fair value, how much is the total consolidated assets on the date of acquisition? Lege a ansimed awit A. 9,252,000 iG B. 10,710,000 oda C. 10,422,000 D. 8,964,000 A FP oeguiition pr PROBLEM 5. Clark Company's stockholders’ equity as of December 31, 2015 is P7,308,000,0n January 1, 2016 Clark acquires 30% of Rome Company’s ordinary shares for P540,000 cash and by issuing fis own shares with a fair value of P1,350,000. Clark acquired significant influence over Rome ‘as a result of the stock acquisition. After four months, Clark purchases another 60% of Rome's ordinary shares for a cash payment of P3,942,000. On this date, Rome reports identifiable assets with carrying value of P6,480,000 and fair value of P11,520,000 and it has liabilities with a book value and a fair value of P3,240,000. #YKA @ Agr 1, Toiu® G, 20 60 [At the acquisition date, net loss reported by Rome for the four-month ended amounted to P900,000, The fhir value of the 10% non-controlling interest is P1,296,000. Non-controlling interest i valved using the proportion Clark also paid the following: P90,000 for legel fees, P72,000 for Fre fee B77,400 Tor accountant’s fee, PO4,800 for audit fee for SEC registration of ste issued and P19,800 for grinting of stock certificates. f2%.m 820 0 ; . Immediately after the business combination, how much is the consolidated total equity? ss He 7206 le aaa (419400 X40) A. 9,954,000 Ysa imance 1, 997 tain tea? : B. 10,782,000 Dig in Rc I aaa €. 10,431,000 ; Sioa 437 431, fest op Bus.lon. Uoraon 8 ism = ole D, 9243.00 Frat Gig) lami Fe Re 8019 wl on, (med) XP gy, in ASE) Beh. foneses —Ftitoms “gyame "ove te ain we