Professional Documents
Culture Documents
NAME: Date:
Professor: Section: Score:
1. On January 1, 20x1, ABC Co. acquired 75% interest in XYZ, Inc. for ₱2,500,000 cash. ABC Co.
incurred transaction costs of ₱250,000 for legal, accounting and consultancy fees in negotiating
the business combination. ABC Co. elected to measure NCI at the NCI’s proportionate share in
XYZ, Inc.’s identifiable net assets. The carrying amounts and fair values of XYZ’s assets and
liabilities at the acquisition date were as follows:
Solution:
Fair value of identifiable assets acquired excluding
goodwill (4,000,000 total assets – 50,000 goodwill) 3,950,000
Less: Fair value of liabilities assumed (1,000,000)
Fair value of identifiable net assets acquired 2,950,000
The ₱250,000 transaction costs are expensed. Acquisition-related costs do not affect the
measurement of goodwill.
2. The management of an entity is unsure how to treat a restructuring provision that they wish to
set up on the acquisition of another entity. Under PFRS 3, the treatment of this provision will be
a. A charge in the income statement in the post-acquisition period.
b. To include the provision in the allocated cost of acquisition.
c. To provide for the amount and, if the provision is overstated, to release the excess to the
income statement in the post-acquisition period.
d. To include the provision in the allocated cost of acquisition if the acquired entity commits
itself to a restructuring within a year of acquisition.
3. The method required under PFRS 3 to be used in accounting for business combinations is
a. Purchase method c. Acquisition method
b. Buy method d. Combination method
5. PFRS 3 requires that the contingent liabilities of the acquired entity should be recognized in the
balance sheet at fair value. The existence of contingent liabilities is often reflected in a lower
purchase price. Recognition of such contingent liabilities will
a. Decrease the value attributed to goodwill, thus decreasing the risk of impairment of
goodwill.
b. Decrease the value attributed to goodwill, thus increasing the risk of impairment of
goodwill.
c. Increase the value attributed to goodwill, thus decreasing the risk of impairment of
goodwill.
d. Increase the value attributed to goodwill, thus increasing the risk of impairment of goodwill.
6. Are the following statements about an acquisition true or false, according to PFRS 3 Business
combinations?
I. The acquirer should recognize the acquiree's contingent liabilities if certain conditions are
met.
II. The acquirer should recognize the acquiree's contingent assets if certain conditions are met.
a. False, False b. False, True c. True, False d. True, True
7. Given the following information, how is goodwill from a business combination computed under
PFRS 3?
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A = Consideration transferred
B = Non-controlling interest in net assets of subsidiary
C = Previously held equity interest
D = Fair value of net identifiable assets of subsidiary
% = Percentage of ownership acquired by the parent in the subsidiary
a. A+B+C-D c. (A+C) – (D x %)
b. A – (D x %) d. (A+B) – [(D x %) – B]
8. In a business combination, an acquirer's interest in the fair value of the net assets acquired
exceeds the consideration transferred in the combination. Under PFRS 3 Business Combinations,
the acquirer should
a. recognize the excess immediately in profit or loss
b. recognize the excess immediately in other comprehensive income
c. reassess the recognition and measurement of the net assets acquired and the consideration
transferred, then recognize any excess immediately in profit or loss
d. reassess the recognition and measurement of the net assets acquired and the consideration
transferred, then recognize any excess immediately in other comprehensive income
9. Which one of the following reasons would not contribute to the creation of negative goodwill?
a. Errors in measuring the fair value of the acquiree’s net identifiable assets or the cost of the
business combination.
b. A bargain purchase.
c. A requirement in an IFRS to measure net assets acquired at a value other than fair value.
d. Making acquisitions at the top of a “bull” market for shares.
10. The “excess of the acquirer’s interest in the net fair value of acquiree’s identifiable assets,
liabilities, and contingent liabilities over cost” (formerly known as negative goodwill) should be
a. Amortized over the life of the assets acquired.
b. Reassessed as to the accuracy of its measurement and then recognized immediately in profit
or loss.
c. Reassessed as to the accuracy of its measurement and then recognized in retained earnings.
d. Carried as a capital reserve indefinitely.
11. This type of business combination occurs when, for example, a private entity decides to have
itself “acquired” by a smaller public entity in order to obtain a stock exchange listing.
a. Step acquisition c. Reverse acquisition
b. Rewind acquisition d. Stock acquisition
12. Acquisition accounting requires an acquirer and an acquiree to be identified for every business
combination. Where a new entity (H) is created to acquire two preexisting entities, S and A,
which of these entities will be designated as the acquirer?
a. H. b. S. c. A. d. A or S.
On January 1, 20x1, KNAVE acquired 80% of the equity interests of RASCAL, Inc. in exchange for
cash. Because the former owners of RASCAL needed to dispose of their investments in RASCAL by
a specified date, they did not have sufficient time to market RASCAL to multiple potential buyers.
As January 1, 20x1, RASCAL’s identifiable assets and liabilities have fair values of ₱4,800,000 and
₱1,600,000, respectively.
13. KNAVE Co. elects the option to measure non-controlling interest at fair value. An independent
consultant was engaged who determined that the fair value of the 20% non-controlling interest
in RASCAL, Inc. is ₱620,000.
If KNAVE Co. paid ₱4,000,000 cash as consideration for the 80% interest in RASCAL, Inc., how
much is the goodwill (gain on bargain purchase) on the business combination?
a. 800,000 b. 2,060,000 c. 1,440,000 d. 1,420,000
D
Solution:
Consideration transferred 4,000,000
Non-controlling interest in the acquiree 620,000
Previously held equity interest in the acquiree -
Total 4,620,000
Fair value of net identifiable assets acquired (3,200,000)
Goodwill 1,420,000
14. KNAVE Co. elects the option to measure non-controlling interest at fair value. An independent
consultant was engaged who determined that the fair value of the 20% non-controlling interest
in RASCAL, Inc. is ₱620,000.
If KNAVE Co. paid ₱2,400,000 cash as consideration for the 80% interest in RASCAL, Inc., how
much is the goodwill (gain on bargain purchase) on the business combination?
a. (180,000) b. (800,000) c. (160,000) d. (200,000)
A
Solution:
Consideration transferred 2,400,000
Non-controlling interest in the acquiree 620,000
Previously held equity interest in the acquiree -
Total 3,020,000
Fair value of net identifiable assets acquired (4.8M –1.6M) (3,200,000)
Gain on a bargain purchase (180,000)
15. KNAVE Co. elects the option to measure non-controlling interest at fair value. A value of
₱1,000,000 is assigned to the 20% non-controlling interest in RASCAL, Inc. [(₱4M ÷ 80%) x 20% =
1,000,000].
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If KNAVE Co. paid ₱4,000,000 cash as consideration for the 80% interest in RASCAL, Inc., how
much is the goodwill (gain on bargain purchase) on the business combination?
a. 200,000 b. 1,800,000 c. 2,440,000 d. 1,440,000
B
Solution:
Consideration transferred 4,000,000
Non-controlling interest in the acquiree 1,000,000
Previously held equity interest in the acquiree -
Total 5,000,000
Fair value of net identifiable assets acquired (3,200,000)
Goodwill 1,800,000
16. KNAVE Co. elects the option to measure the non-controlling interest at the non-controlling
interest’s proportionate share of RASCAL, Inc.’s net identifiable assets
If KNAVE Co. paid ₱4,000,000 cash as consideration for the 80% interest in RASCAL, Inc. and, how
much is the goodwill (gain on bargain purchase) on the business combination?
a. 1,440,000 b. 800,000 c. 1,400,000 c. 960,000
A
Solution:
Fair value of identifiable assets acquired 4,800,000
Fair value of liabilities assumed (1,600,000)
Fair value of net identifiable assets acquired 3,200,000
Multiply by: Non-controlling interest 20%
NCI’s proportionate share in net identifiable assets 640,000
SMUTTY incurred the following acquisition-related costs: legal fees, ₱40,000, due diligence costs,
₱400,000, and general administrative costs of maintaining an internal acquisitions department,
₱80,000.
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17. Case #1: As consideration for the business combination, SMUTTY Co. transferred 8,000 of its
own equity instruments with par value per share of ₱400 and fair value per share of ₱500 to
OBSCENE’s former owners. Costs of registering the shares amounted to ₱160,000. How much is
the goodwill (gain on bargain purchase) on the business combination?
a. 716,000 b. 556,000 c. 600,000 d. 1,200,000
D
Solution:
Consideration transferred (8,000 sh. x ₱500) 4,000,000
Non-controlling interest in the acquiree -
Previously held equity interest in the acquiree -
Total 4,000,000
Fair value of net identifiable assets acquired (6.4M - 3.6M) (2,800,000)
Goodwill 1,200,000
18. Case #2: As consideration for the business combination, SMUTTY Co. issued bonds with face
amount and fair value of ₱4,000,000. Transaction costs incurred in issuing the bonds amounted
to ₱200,000. How much is the goodwill (gain on bargain purchase) on the business combination?
a. 716,000 b. 556,000 c. 600,000 d. 1,200,000
D
Solution:
Consideration transferred (fair value of bonds) 4,000,000
Non-controlling interest in the acquiree -
Previously held equity interest in the acquiree -
Total 4,000,000
Fair value of net identifiable assets acquired (6.4M - 3.6M) (2,800,000)
Goodwill 1,200,000
19. On January 1, 20x1, ENTREAT Co. acquired all of the identifiable assets and assumed all of the
liabilities of BEG, Inc. by paying cash of ₱4,000,000. On this date, the identifiable assets acquired
and liabilities assumed have fair values of ₱6,400,000 and ₱3,600,000, respectively. ENTREAT
Co. has estimated restructuring provisions of ₱800,000 representing costs of exiting the activity
of BEG, costs of terminating employees of BEG, and costs of relocating the terminated
employees. How much is the goodwill (gain on bargain purchase)?
a. 1,080,000 b. 1,280,000 c. 1,120,000 d. 1,200,000
D
Solution:
Consideration transferred 4,000,000
Non-controlling interest in the acquiree -
Previously held equity interest in the acquiree -
Total 4,000,000
Fair value of net identifiable assets acquired (6.4M - 3.6M) (2,800,000)
Goodwill 1,200,000
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The ₱800,000 restructuring provisions are ignored because these are post-acquisition expenses.
20. On January 1, 20x1, HISTRIONAL Co. acquired all of the identifiable assets and assumed all of
the liabilities of THEATRICAL, Inc. by paying cash of ₱4,000,000. On this date, the identifiable
assets acquired and liabilities assumed have fair values of ₱6,400,000 and ₱3,600,000,
respectively.
As of January 1, 20x1, HISTRIONAL holds a building and a patent which are being rented out to
THEATRICAL, Inc. under operating leases. HISTRIONAL has determined that the terms of the
operating lease on the building compared with market terms are favorable. The fair value of the
differential is estimated at ₱80,000. How much is the goodwill (gain on bargain purchase)?
a. 1,080,000 b. 1,280,000 c. 1,120,000 d. 1,200,000
C
Solution:
Fair value of identifiable assets acquired, including
intangible asset on the operating lease with favorable 6,480,000
terms (₱6.4M + ₱80K)
Fair value of liabilities assumed (3,600,000)
Fair value of net identifiable assets acquired 2,880,000
21. On January 1, 20x1, SUBTERFUGE Co. acquired all of the identifiable assets and assumed all of
the liabilities of DECEPTION, Inc. by paying cash of ₱4,000,000. On this date, the identifiable
assets acquired and liabilities assumed have fair values of ₱6,400,000 and ₱3,600,000,
respectively.
Additional information:
SUBTERFUGE intends to sell immediately a factory plant included in the identifiable assets of
DECEPTION. All of the “held for sale” classification criteria under PFRS 5 are met. As of
January 1, 20x1, the factory plant has a fair value of ₱1,200,000 and a carrying amount of
₱1,000,000 in the books of DECEPTION. Costs to sell the factory plant is ₱80,000.
Not included in the identifiable asset of DECEPTION is a research and development intangible
asset that SUBTERFUGE does not intend to use. The fair value of this asset is ₱200,000.
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Also, not included in the identifiable asset of DECEPTION is a customer list, with an estimated
value of ₱40,000, in the form of a database where the nature of the information is subject to
national laws regarding confidentiality.
C
Solution:
Fair value of identifiable assets 6,400,000
Costs to sell of the “held for sale” asset (80,000)
Fair value of unrecognized research and development 200,000
Adjusted value of identifiable assets 6,520,000
Fair value of liabilities assumed (3,600,000)
Fair value of net identifiable assets acquired 2,920,000
22. On January 1, 20x1, CHIDE Co. acquired 90% of the identifiable assets and assumed all of the
liabilities of SCOLD, Inc. by paying cash of ₱4,000,000. On this date, SCOLD’s identifiable assets
and liabilities have fair values of ₱6,400,000 and ₱3,600,000, respectively. Non-controlling
interest has a fair value of ₱320,000.
As of January 1, 20x1, SCOLD had the following which were not included in the acquisition-date fair
value measurement of liabilities:
SCOLD has an existing contract with a customer to deliver products at a specified future date. In
accordance with the agreement, SCOLD shall pay a penalty for failure to deliver the said goods.
CHIDE determined that the fair value of the penalty is ₱40,000. However, because CHIDE
expects to comply with the agreement, it was assessed that payment of penalty is improbable.
SCOLD has guaranteed a bank loan of a third party. CHIDE shall replace SCOLD as the
guarantor. If the third party defaults on the loan, CHIDE will be held liable for the guarantee.
CHIDE determined that the fair value of the guarantee is ₱120,000. However, both SCOLD and
CHIDE believe that the third party will not default on its loan from the bank.
There is a pending unresolved litigation filed by a third party against SCOLD. CHIDE
determined that the fair value of settling the litigation is ₱200,000. However, because the legal
counsels of both CHIDE and SCOLD strongly believe that they will win the case, it was assessed
that payment for the settlement of the litigation is improbable.
A
Solution:
The adjusted fair value of net identifiable assets acquired is computed as follows:
Fair value of identifiable assets acquired 6,400,000
Total fair value of liabilities assumed:
Fair value of liabilities assumed 3,600,000
Fair value of contingent liabilities assumed:
Contractual contingent liability assumed 40,000
Contractual contingent liability assumed 120,000
Non-contractual contingent liability assumed 200,000 (3,960,000)
Fair value of net identifiable assets acquired 2,440,000
23. On January 1, 20x1, PRODIGIOUS Co. acquired all of the identifiable assets and assumed all of
the liabilities of EXTRAORDINARY, Inc. by paying cash of ₱4,000,000. On this date, the
identifiable assets acquired and liabilities assumed have fair values of ₱6,400,000 and ₱3,600,000,
respectively.
B
Solution:
The fair value of the consideration transferred is determined as follows:
Cash payment (₱4M x 50%) 2,000,000
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The fair value of the net identifiable assets acquired is computed as follows:
Fair value of assets 6,400,000
Indemnification asset (480,000 – 400,000) 80,000
Total 6,480,000
Fair value of liabilities (3,600,000)
Fair value of net identifiable assets acquired 2,880,000
24. On January 1, 20x1, ATTAINDER Co. acquired all of the assets and assumed all of the liabilities
of DISHONOR, Inc. As of this date, the carrying amounts and fair values of the assets and
liabilities of DISHONOR acquired by ATTAINDER are shown below:
Assets Carrying amounts Fair values
Cash in bank 40,000 40,000
Receivables 800,000 480,000
Allowance for probable losses on
(120,000)
receivables
Inventory 2,080,000 1,400,000
Building – net 4,000,000 4,400,000
Goodwill 400,000 80,000
Total assets 7,200,000 6,400,000
Liabilities
Payables 1,600,000 1,600,000
ATTAINDER Co. paid ₱6,000,000 cash as consideration for the assets and liabilities of DISHONOR,
Inc. It was determined on acquisition date that DISHONOR, Inc. has an unrecorded patent with a
fair value of ₱120,000 and a contingent liability with fair value of ₱80,000.
Although adjustments are to be made to the carrying amounts of the assets and liabilities, no
adjustments shall be made to their tax bases. All adjustments to the carrying amounts of assets and
liabilities result to temporary differences. ATTAINDER’s tax rate is 30%.
How much is the goodwill (gain on bargain purchase) on the business combination?
a. 1,148,000 b. 1,108,000 c. 1,028,000 d. 1,240,000
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B
Solution:
The deferred tax liability and asset are computed as follows:
Taxable/ (Deductible) Temporary
Carrying amounts Fair values
difference
Cash in bank 40,000 40,000 -
Receivables – net 680,000 480,000 200,000
Inventory 2,080,000 1,400,000 680,000
Building – net 4,000,000 4,400,000 (400,000)
Patent - 120,000 (120,000)
Payables 1,600,000 1,600,000 -
Contingent liability - 80,000 80,000
The fair value of the net identifiable assets of the acquiree is computed as follows:
Fair value of identifiable assets acquired excluding
recorded goodwill (6.4M – 80K goodwill + 120K unrecorded 6,728,000
patent + 288K deferred tax asset)
Fair value of liabilities assumed (1.6M + 80K contingent
(1,836,000)
liability + 156K deferred tax liability)
Fair value of net identifiable assets acquired 4,892,000
25. On January 1, 20x1, FARCICAL Co. acquired all of the assets and liabilities of ABSURD, Inc. for
₱6.4M. As of this date, the carrying amounts and fair values of the assets and liabilities of
ABSURD are shown below:
Assets Carrying amounts Fair values
Cash in bank 40,000 40,000
Receivables 800,000 480,000
Allowance for probable losses on (120,000)
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receivables
Inventory 2,080,000 1,400,000
Building – net 4,000,000 4,400,000
Goodwill 400,000 80,000
Total assets 7,200,000 6,400,000
Liabilities
Dividends payable 400,000 400,000
Other payables 1,600,000 1,600,000
2,000,000 2,000,000
The dividends payable pertain to dividends declared by ABSURD, Inc. on December 28, 20x0 to
shareholders of record on January 15, 20x1. The dividends will be distributed on January 31, 20x1.
D
Solution:
The consideration transferred is adjusted for the dividends purchased as follows:
Fair value of consideration transferred 6,400,000
Dividends-on (Dividends purchased) (400,000)
Adjusted consideration transferred 6,000,000
Additional information:
COLLOQUY’s share capital consists of 60,000 ordinary shares with par value of ₱40 per share.
CONVERSATION’s share capital consists of 3,000 ordinary shares with par value of ₱400 per
share.
26. How much is the fair value of consideration transferred on the business combination?
a. 4,000,000 b . 2,400,000 c. 4,400,000 d. 4,800,000
A
Solution:
COLLOQUY Co. Combined entity Increase
Share capital 2,400,000 2,800,000 400,000
Share premium 1,200,000 4,800,000 3,600,000
Totals 3,600,000 7,600,000 4,000,000
The fair value of the shares transferred as consideration for the business combination is ₱4,000,000 (i.e.,
total increase in share capital and share premium accounts).
D
Solution:
Increase in COLLOQUY’s share capital account
(see table above) 400,000
Divide by: ABC’s par value per share 40
Number of shares issued 10,000
A
Solution:
Fair value of consideration transferred 4,000,000
Divide by: Number of shares issued 10,000
Acquisition-date fair value per share 400
B
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Solution:
Consideration transferred 4,000,000
Non-controlling interest in the acquiree -
Previously held equity interest in the acquiree -
Total 4,000,000
Fair value of net identifiable assets acquired (6.4M - 3.6M) (2,800,000)
Goodwill 1,200,000
30. What is the retained earnings of the combined entity immediately after the business
combination?
a. 3,120,000 b. 3,320,000 c. 3,280,000 d. 3,200,000
31. On January 1, 20x1, OBDURATE Co. acquired 30% ownership interest in STUBBORN, Inc. for
₱400,000. Because the investment gave OBDURATE significant influence over STUBBORN, the
investment was accounted for under the equity method in accordance with PAS 28.
From 20x1 to the end of 20x3, OBDURATE recognized ₱200,000 net share in the profits of the
associate and ₱40,000 share in dividends. Therefore, the carrying amount of the investment in
associate account on January 1, 20x3, is ₱560,000.
On January 1, 20x4, OBDURATE acquired additional 60% ownership interest in STUBBORN, Inc. for
₱3,200,000. As of this date, OBDURATE has identified the following:
a. The previously held 30% interest has a fair value of ₱720,000.
b. STUBBORN’s net identifiable assets have a fair value of ₱4,000,000.
c. OBDURATE elected to measure non-controlling interests at the non-controlling interest’s
proportionate share of STUBBORN’s identifiable net assets.
A
Solution:
Consideration transferred 3,200,000
Non-controlling interest in the acquiree (1M x 10%) 400,000
Previously held equity interest in the acquiree 720,000
Total 4,320,000
Fair value of net identifiable assets acquired (4,000,000)
Goodwill 320,000
32. OBSTREPEROUS Co. and NOISY, Inc. both engage in the same business. On January 1, 20x1,
OBSTREPEROUS and NOISY signed a contract, the terms of which resulted in OBSTREPEROUS
obtaining control over NOISY without any transfer of consideration between the parties.
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The fair value of the identifiable net assets of NOISY, Inc. on January 1, 20x1 is ₱4,000,000. NOISY
chose to measure non-controlling interest at the non-controlling interest’s proportionate share of the
acquiree’s identifiable net assets.
B
Solution:
Consideration transferred -
Non-controlling interest in the acquiree (4M x 100%) 4,000,000
Previously held equity interest in the acquiree -
Total 4,000,000
Fair value of net identifiable assets acquired (4,000,000)
Goodwill -
On July 1, 20x2, INNOCUOUS finally received the valuation report from the independent valuer
which shows that the fair value of the building as of September 30, 20x1 is ₱2,000,000 and remaining
useful from that date is 5 years.
34. On July 1, 20x2, INNOCUOUS obtained new information that HARMLESS has an unrecorded
patent which was not identified on September 30, 20x1. It was believed that the unrecorded
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patent had a fair value of ₱400,000 and a remaining useful life of 4 years as of September 30,
20x1.
35. On November 1, 20x2, the internal auditors of INNOCUOUS discovered an error on the
recorded identifiable assets acquired from HARMLESS on the business combination. A patent
with a fair value of ₱400,000 and a remaining useful life of 4 years as of September 30, 20x1 was
omitted from the valuation listing.
36. On September 30, 20x1, RIBALD Co. acquired all of the identifiable assets and assumed all of the
liabilities of OFFENSIVE, Inc. by issuing 10,000 shares with par value of ₱20 per share.
On this date, RIBALD’s shares were assigned a provisional value of ₱400 per share. Also, because
some identifiable assets acquired and liabilities assumed have fair values that were not readily
available, a provisional amount of ₱2,800,000 was assigned to OFFENSIVE’s net identifiable assets.
On April 1, 20x2, after RIBALD’s 20x1 financial statements were issued, new information was
obtained confirming that the fair value of RIBALD’s shares on September 30, 20x1 is ₱440 per share
and that the fair value of OFFENSIVE’s net identifiable assets as of September 30, 20x1 is ₱3,600,000.
On July 1, 20x2, two competitors of RIBALD have also merged which led to RIBALD believing that
the merger with OFFENSIVE is not as profitable as expected. RIBALD now wants to decrease the
amount assigned to the consideration transferred to OFFENSIVE on September 30, 20x1 to ₱360 per
share and the value of OFFENSIVE’s net identifiable assets to ₱1,600,000.
How should RIBALD account for the new information obtained on July 1, 20x2?
a. As a retrospective adjustment resulting to increase in goodwill by ₱400,000.
b. As a retrospective adjustment resulting to decrease in goodwill by ₱400,000.
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37. When consolidating the financial statements of a parent and its subsidiary, which of the
following is eliminated?
a. Goodwill c. Investment in subsidiary
b. NCI in net assets d. All of these
38. A British parent entity uses the revaluation model to measure its property, but a Philippine
subsidiary uses the cost model. The Philippine subsidiary’s directors find the revaluation model
too costly to implement. In the consolidated financial statements, is the group allowed to
measure the Philippine subsidiary’s property under the cost model?
a. Yes, the British parent’s property shall be adjusted to conform to the subsidiary’s accounting
policy of cost model.
b. No, the Philippine subsidiary’s property shall be adjusted to conform to the group’s
accounting policy of revaluation model.
c. Yes, both models will be reflected in the consolidated financial statements, but this fact must
be disclosed in the notes.
d. None of these, the property is eliminated in the consolidated financial statements.
Entity A Entity B
Cash in bank 12,000 6,000
Accounts receivable 36,000 14,400
Inventory 48,000 27,600
Investment in subsidiary 90,000 -
Building, net 216,000 48,000
Total assets 402,000 96,000
Additional information:
Entity B’s assets and liabilities are stated at their acquisition-date fair values, except for the
following:
- Inventory, ₱37,200
- Building, net, ₱57,600
The NCI in the net assets of the subsidiary, also determined under PFRS 3, is ₱21,600.
A Solution:
Entity A Entity B Consolidated
Cash in bank 12,000 6,000 18,000
Accounts rec. 36,000 14,400 50,400
Inventory 48,000 27,600 (48K + 37.2K) 85,200
Inv. in sub. 90,000 - eliminated -
Building, net 216,000 48,000 (216K + 57.6K) 273,600
Goodwill given 3,600
Total assets 402,000 96,000 430,800
“He will have no fear of bad news; his heart is steadfast, trusting in the Lord. His heart is secure, he will have
no fear; in the end he will look in triumph on his foes.”
(Psalm 112:7-8)
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