Scribd Logo
Upload

Welcome to Scribd!

  • Quiz 2 To 4

    Uploaded by

    Lee Teuk
    273 views8 pages

    Original Title

    quiz-2-to-4

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    273 views8 pages

    Quiz 2 To 4

    Uploaded by

    Lee Teuk

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 8
    POLYTECHNIC UNIVERSITY OF THE PHILIPPINES COLLEGE OF ACCOUNTANCY AND FINANCE Quiz 2 to 4— Accounting for Business Combination December 13, 2020 MULTIPLE CHOICE THEORIES (1 point each). Shade the letter of the best answer. 1. To accomplish its objective, PFRS 3 establishes principles and requirements for how the acquirer (choose the incorrect one): recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquire. b. recognizes and measures the goodwill acquired in the business co a bargain purchase cc. determines what information to disclose to enable users of the financial statement evaluate the nature and nonfinancial effects of the business combination. d. None of the above. S— fineeedl ymbination or a gain from 5 to 2. Anentty shall determine whether a transaction or other event is a business combination by applying the definition in PERS 3, which requires that all of the combining entities or businesses are ultimately parties both before and after the business combination b. all of the combining entities transfer thelr net assets, transfer their equity interests, to a newly formed entity coe nee unerenmed conatutes sess, / §. a group of former owners of ane ofthe combining entities obtains control of the combined entity. a controlled by the same party or or the owners of those entities 3. The acquirer shall identify the acquisition date, which 1s the date on which it obtains control of the ‘acquire. Which of the following is incorrect? a. The date on which the acquirer obtains control of the acquiree 's generally the date on Ainich the acquirer legally transfers the consideration, acquires the assets and assumes the liabilities of the acquiree—the closing date. b. The acquirer might obtain control on a date that i elther earlier or later than the closing date sare cquirer shall consider all pertinent facts and circumstances In identifying the acquisition date d. None of the above. v 4. Asof the acquistion date, the acquirer shall recognize, separately from goodwill, the identifiable assets Scquired, the liabilities assumed and any non-controlling interest in the acquire. Recognition of chentifiable assets acquired and liabilities assumed is subject to the following conditions: veryst_ meet the definitions of assets and liabilities in the Framework for the Preparation and Presentation of Financial Statements at the acquisition date, b Must be part of what the acquirer and the acquiree (or its former owners) exchanged in the business combination transaction rather than the result of separate transactions The acquirer's application of the recognition principle and conditions, may result in recognizing some assets and liabilties that the acquiree had not previously recognized as ‘assets and liabilitiesn its financial statements d. Allofthe above. should be covered by the recognition and measurement « 5, Which of the following principles under PFS 3 ‘a, Employee benefits Share-based payment transactions Assets held for sale jone of the above. b « d. None of the above. 6. Statement 1: In a business combination achieved in stages, the acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or ae aay inother comprenensive ncome.) (YL porting periods, the amount that was recognized in other comprehensive Statement 2. In prior rer Page L income shall be recognized on the same basis as would be required if the acquirer had disposed directly of the previously held equity interest a. True, True b. True, False c. False, False d. False, True 7. An investor controls an investee if and only if the investor has all the following (choose the incorrect one): 2. power over the investee b. exposure, or rights, to variable returns from its involvement with the investee € majonity tin the d. the ability to use its power over the investee to affect the amount ‘of the investor's returns 7 ah 8 Statement 1“A parent shall prepare consolidated financial statements using uniform accounting policies Tor new fansactions and other events in simlar cumstances Statemént 2: Consolidation of an investee shall begin from the date the investor ‘obtains control of the investee and cease when the investor loses equity interests ‘ofthe Investee. 3 Tre, True “ns b True, Fase cant fale, Fale Fake, Tue 9. fa parent loses control of a subsidiary, the parent (choose the incorrect one): 2 derecognizes the assets and liabilities of the former subsidiary from the consolidated statement of financial position. bb. recognizes any investment retained in the former subsidiary at its fair value when control is lost and subsequently accounts for it and for any amounts owed by or to the former subsidiary in accordance with relevant PFRSS fecognizes the gain of loss associated with te loss of control attributable to the former controlling interest d_ None of the above. 10, hich of the following is incorrect pertaining to investment entities? va parent that either ceases to be an investment entity or becomes an investment entity shall account for the change li status occurred b. An investment entity shall not ¢ control of another entity. Instea subsidiary at fir value through profit or loss seen inwestment entity has a subsidiary that provides services that relate tothe Investment cf ty has a subsidiary that o a " entity's investment activites, teed not consolidate that subsidiary ‘consolidate all entities that it controls, including 4. A parent of an investment entity shall those controled through an investment entity subsidiary, unless the parent itself is an investment entity © in its status prospectively from the date at which the change in ‘onsolidate its subsidiaries or apply PFRS 3 when it obtains xd, an investment entity shall measure an investment In 2 MULTIPLE CHOICE PROBLEMS (2 points each), Show ‘computations on the separate worksheet. 1 Finas Corp waved 200000 ses ts P30 par vale ordinary stock on March 31, 2019, to acquire all of | the outstanding P25 par value ordinary stock of Sill ne Pinas Corp paid P10,000 for printing and registering new shares of stocks ‘on March 31, 2019, the market price of Pinas ordinary stock was P35 | | regi | per share. Both corporations continue 10 operate as separate businesses. | on starch 31,2019, immediately before combination, the stockholders’ equities were ————— 1 Pinas Corp__|___Sukl Ine | Ferainary stock a | \dditional paid-in ‘capital Page 2 Retained earnings 7,360,000 2,240,000 | Aditional information 14. | Pete Corporation and Sol company agreec On March 10, 2019, Suki inc paid a cash dividend totaling P250,000 on its ordinary stock ‘On November 15, 2019, Pinas paid a cash dividend totaling P1 5M on its ordinary stock Suki’s 2019 net income was P1,450,000. Pinas 2019 net income was P2,240,000, before considering equity in Suk net income. Pinas and Suki, respectively. Determine the following amounts P50, 2,290,000.) 7,000,000 ») 7 ¥ IAL eae ‘re sh Professional Fees | Indirect acquisition costs Cost to Register and issue stock Before combination, their respective balance sheets showed stock holders equity account as follow: | Copital stock | Adaitional paid n capital | Retained earnings Determine the following amounts: 14-Goodwill, 24M 15, Consolidated shareholders’ equity, 24,470,000 / "24,720,000 24,840,000 24,670,000 24,890,000 acces. | purchase of interests. Their condensed + The balance in retained earnings at December 31, 2019, were P6,820,000 and P2,290,000 for LL The net income of Suki from April 1 to December 31, 2019 in its separate FS, 12. The consolidated net income for the year ending December 31, 2019 13, The balance of investment account as of December 31, 2019. :d to combine their businesses, with Pete Corporation asthe || surviving entity. Pete wit gud t8.0 (48,000 shares of its capital stock, with a par value of P100 per share, and a Pete incurred the following additional acquisition cost wy, _° s_| 120,000 80,000 | 50,000 | Pete So! 7,200,000 3,600,000 3,120,000 360,000 6,000,000 2,040,000 om (nn IM 3. . A ak pn GA — $a!) TW p Cok| patents Total assets Rook Horse 000 PA627,600, Current assets ye 1,040,000 Property and equipment, net se Saaea 7,942,000 2,927,600 000 ___P171,600_ Let aon rope ecounedorasa r sralion was merged into Horse Company na acomi ee ae balance sheets before the combination are ‘Capital stock, par P100 2,600,000 1,300,000 | Additional paid in capital 390,000 350,000 | Retained earnings 1,248,000 1,106,000 Total liabilities and equity 7,942,000 2,927,600 « Per appraisal's report, Horse assets have fair values of: | Current assets 1,653,600 | Property and equipment 1,248,000 : Patents 338,000 re FE | Rook Corporationflurchases the net assets of horse for P3,168,000 cash Gain bb le Finny eee What is the total asset of Rook CorporationAfter the combination? L | 2 7,354,000 Au | b. 7,254,000 f r3qen | << PB,113,600-> ey) | 4-~P9,181,600 (en ui) $3, 6 17. | Red Corporation will issue common shares with a par value P10 for the net dssets of Bive Company. Red common stock has current market value of P40 per share. Blue Balance sheet on the Date of acquisition | | follow | | Current assets | P320,000 | Common stock, P5 par | P800,000 | [Property and 880,000 ‘Additional paid in 320,000 | [equipment - capital (Liabilities | 400,000 [ Retained earnings 480,000 Blue’s current assets are appraised at P400,000 and the property and equipment was also appraised at | 1,600,000. Its liabilities are fairly valued. Accordingly, Red Corporation Issued shares of its common | stock with a total market value equal to that of Blue’s net assets including goodwill To recognize goodwill of P200,000, how many shares were to be issued by Red? | | 45,000 ; | ae [or 242 4k 50,000 (Lem) | d. 55,000 _——~ | yak 1 | t | 1-48. [The stockholder’s equities of Par Corporation and Son Company at July 1, 2019 were as follows: | Par ‘Son O_o Capital stock, P100 par 35,000,000 8,000,000 ‘Additional paid in capital 2,000,000 4,000,000 Retained earnings 6,000,000___P 3,000,000 Retainedearnings rT On July 2, 2019, par issued 150,000 of its shares with a market value of P120 per share for the assets and liabilities of Son, and Son was dissolved. On the same day, Par paid P50,000 for indirect cost and | | p100,000 for SEC registration of equity secunties | 13 ‘After the combination, what is the total stockholders’ equity of Par Corporation 1M) | | a¢-a1,000,000,. > sik ) | b, 40,850,008 rik €. 41,150,000 oe dé. 40,900,000 — 20 On June 30, 2019, Wi “orporation issued 100,000 shares of its P20 par value common stock for the inet assets of Black Company in a combination accounted for by the acquisition method. The market value of White's common stock on June 30 was P36 per Share White paid a fee of 100,000 to the Broker who arranged this acquisition, Cost of SEC registration and issuance of the equity securities amounted to 50,000. Contingent consideration determined to be paid after acquisition amounts to P20,000. What amount should White capitalize as the cost of acquiring Black’s net assets. 3,620,009 '2.P3,700,000 | b.P3,650,000 |

    You might also like