SamSam Company and Baste Company agreed to a combination on January 1, 2015.

On the date of combination, th

SamSam
Book Value
Cash and receivables 126,000
Inventory 140,000
Land 140,000
Plant and equipment 560,000
Accumulated depreciation (210,000)
Total Assets 756,000

Current liabilities 112,000

Ordinary shares, ?28 par 280,000
Ordinary shares, ?7par -
Share premium 28,000
Accumulated profits 336,000
Total liabilities and shareholder's equity 756,000

Additional information:
(a) The market value of Samsam and Baste shares are?70 and ?28, respectively.

CASE 1

Case 1:
SamSam acquires Baste for PhP 70,000 cash, a transfer of plant and equipment it owns which is currentl
2017 if Samsam's shares will decrease by atleast Php 5 per share. Additional shares shall be issued in ord
will decrease to PhP 48 is 40%, while if it forecasted to decrease to PhP 40 with a 60% chance of occure
development amounting to PhP 70,000 which has not yet reached technological feasibility. Reminder: A
a. Compute the Goodwill (Gain on acquisition), enclosed your answer () if gain.
b. Compute the Post-combination Total Liabilities
c. Compute the Post-combination Shareholder's equity
d. Compute the consideration transferred

FV of consideration transferred
Cash and receivables
Plant and equipment 0.25
Ordinary shares, ?28 par 4,200.00 70
Contingent consideration- shares
Share Price @ acqisition date 70
Est, 01/01/2017 FV 53
 Decrease in fair value
Probability 40%
PV of contingent shares -
PV Factor
Number of shares to be issued

Share Price @ acqisition date 70

Threshold 45
Decrease in fair value 25
Probability 0.60
PV of contingent shares 15.0000
PV Factor
Number of shares to be issued

FV of Net Assets Acquired

Cash and receivables
Inventory
Land
Plant and equipment
Research and development
Current liabilities
Goodwill (Bargain Purchase Gain)

SamSam
Pre
Cash and receivables 126,000
Inventory 140,000
Land 140,000
Plant and equipment 560,000
Accumulated depreciation (210,000)
Research and development
Goodwill
Total Assets 756,000

Current liabilities 112,000

Liability for contingent consideration
Ordinary shares, ?28 par 280,000
Ordinary shares, ?7par -
Share premium 28,000
Accumulated profits 336,000
Total liabilities and shareholder's equity 756,000

CASE 2
Case 2: SamSam acquires Baste for PhP 70,000 cash and 5,600 shares of stock in exchange for all the net assets
a. Compute the consideration transferred
b. Compute the Post-combination Total Liabilities
c. Compute the Post-combination Total Assets
d. Compute the goodwill (Gain on acquisition)
FV of consideration transferred
Cash
Ordinary Shares 5600 70
FV of net assets acquired FV BV
Cash and receivables 28,000.00 28,000
Inventory 58,800.00 42,000
Land 21,000.00 14,000
Plant and equipment 196,000.00 168,000
Current liabilities (28,000.00) (28,000)
Deferred Tax Liability
Goodwill (Bargain Purchase Gain)

SamSam
Pre
Cash and receivables 126,000
Inventory 140,000
Land 140,000
Plant and equipment 560,000
Less: Accumulated depreciation (210,000)
Goodwill
Total Assets 756,000

Current liabilities 112,000

Deferred Tax Liability
Ordinary shares, ?28 par 280,000
Ordinary shares, ?7par -
Share premium 28,000
Accumulated profits 336,000
Total liabilities and shareholder's equity 756,000

CASE 3
Case 3: SamSam acquires Baste for PhP 70,000 cash, issuance for PhP 75,000 bonds payable with an interest rat
assets of Baste. Additional shares shall be contingently issued in January 1, 2017 which is equal to 150%
of shares contingently for issuance will be based on the fair market value prevailing in January 1, 2017.
PhP 50,000, respectively, while the market value of the shares of Samsam in January 1, 2017 is estimate
4% is to be used. The market rate for the bonds issued by SamSam is 8%. Share issue cost and bond issu
differences resulting to deferred taxes using a 30% tax rate. Reminder: Avoid rounding off in the compu

a. Compute the consideration transferred

b. Compute the Goodwill (Gain on acquisition), enclosed your answer () if gain.
c. Compute the Post-combination Shareholder's equity
d. Compute the Post-combination Total Liabilities

FV of considerationtransferred
Cash
Equity 560.00 70
Bonds payable
Face Value 75,000.00
Interest of bonds 7,500.00
7,500.00
7,500.00
7,500.00
7,500.00
7,500.00
7,500.00
7,500.00
7,500.00
82,500.00
Net Present Value 85,065.12
Bond issue cost (1,680.00)
Adjusted Present Value (83,385.12)
7,500.00
7,500.00
7,500.00
7,500.00
7,500.00
7,500.00
7,500.00
7,500.00
 7,500.00
82,500.00
Adjusted Effective Interest Rate 8.3104%
Contingent Liability
2016 Net Cashflows $40,000.00
2017 Net Cashflows 50,000.00
Average cash flow $45,000.00
Threshhold 20,000.00
Excess $25,000.00
Percentage 150%
FV of contingent Liability 37,500.00
Probability 0.60
PV Factor 22,500.00
FV of shares 1/1/2017/ 45.00
Contingent shares 500.00 20,802.51

FV of net assets acquired FV BV

Cash and receivables 28,000 28,000
Inventory 58,800 42,000
Land 21,000 14,000
Plant and equipment 196,000 168,000
Current liabilities (28,000) (28,000)
Deferred Tax Liability
Goodwill (Bargain Purchase Gain)

CASE 4
Case 4: SamSam acquires Baste for 5,880 shares of stock in exchange for all the net assets of Baste. Stock issuan
a. Compute the Goodwill (Gain on acquisition), enclosed your answer () if gain.
b. Compute the consideration transferred
c. Compute the Post-combination Total assets
d. Compute the Post-combination Total Liabilities
FV of consideration transferred 5,880.00 70
FV of net assets acquired
Cash and receivables 28,000
Inventory 58,800
Land 21,000
Plant and equipment 196,000
Current liabilities (28,000)
 Goodwill (Bargain Purchase Gain)

SamSam
Pre
Cash and receivables 126,000
Inventory 140,000
Land 140,000
Plant and equipment 560,000
Less: Accumulated depreciation (210,000)
Goodwill
Total Assets 756,000

Current liabilities 112,000

Ordinary shares, ?28 par 280,000
Ordinary shares, ?7par -
Share premium 28,000
Accumulated profits 336,000
Total liabilities and shareholder's equity 756,000

CASE 5
Case 5:
SamSam acquires Baste for PhP 140,000 cash and 5,600 shares of stock in exchange for all the net asset
promissory note. Additional payment of PhP 28,000 is to be contingently made in January 1, 2017, in ca
a. Compute the post-combination total assets
b. Compute the goodwill (Gain on acquisition)
c. Post Combination Total Liabilities
d. Compute the consideration transferred
FV of consideration transferred
Cash
Notes Payable
Equity Instrument 5,600.00 70
Contingent Liability 28,000.00 40%
FV of net assets acquired
Cash and receivables
Inventory
Land
Plant and equipment
Current liabilities
Goodwill (Bargain Purchase Gain)

SamSam
 Pre
Cash and receivables 126,000
Inventory 140,000
Land 140,000
Plant and equipment 560,000
Less: Accumulated depreciation (210,000)
Goodwill
Total Assets 756,000

Current liabilities 112,000

Notes Payable
Liability for contingent consideration
Ordinary shares, ?28 par 280,000
Ordinary shares, ?7par -
Share premium 28,000
Accumulated profits 336,000
Total liabilities and shareholder's equity 756,000

On January 1 of the current year, Asawa Ko acquired Aking Mahal by purchasing all assets and assuming all liabilit

Asawa Ko
Book value
Cash 420,000
Accounts Receivable 336,000
Inventory 268,800
Prepaid expenses 53,800
Equipment 672,000
Land 806,400
Patent 161,300
Accounts Payable 121,000
Ordinary shares, 5 par value 500,000
Ordinary share premium 125,000
Retained earnings 225,000
Sales 1,927,300
Cost and expenses 180,000

CASE 1
Payments of the acquirer includes the following:
 Cash
Bonds payable, face value of ?600,000
Equipment
Finder's fee
Contingent liability of the acquiree

Compute the : a. Goodwill (Bargain purchase gain)

b. Post combination liabilities
c. Post Combinaton Retained Earnings
d. Post Combination SHE
FV of Consideration Transferred
Cash
Bonds payable
Equipment 0.40 268,800
Fair value of net asset acquired
Cash
Accounts Receivable
Inventory
Equipment
Land
Patent
Accounts Payable
Contingent Liability
Goodwill

Asawa Ko
Pre
Cash 420,000
Accounts Receivable 336,000
Inventory 268,800
Prepaid expenses 53,800
Equipment 672,000
Land 806,400
Patent 161,300
Goodwill
Total Assets 2,718,300

Accounts Payable 121,000

Bonds payable
 Discount on bonds payable
Estimated liability for contingent consideration
Ordinary shares, 5 par value 500,000
Ordinary share premium 125,000
Retained earnings 1,972,300
Total Liabilities and Shareholder's Equity 4,825,600

CASE 2
Payments of the acquirer includes the following:
Cash
Bonds payable, face value of ?700,000
Finder's fee
Research and development of the acquiree

Compute the : a. Goodwill (Bargain purchase gain)

b. Post combination liabilities

FV of the Consideration Transferred

Cash
Bonds Payable
FV of Net Assets Acquired
Cash
Accounts Receivable
Inventory
Equipment
Land
Patent
Research and development
Accounts Payable
Goodwill (Bargain Purchase Gain)

Asawa Ko
Pre
Cash 420,000
Accounts Receivable 336,000
Inventory 268,800
Prepaid expenses 53,800
Equipment 672,000
Land 806,400
 Patent 161,300
Research and development
Total Assets 2,718,300

Accounts Payable 121,000

Bonds payable
Premium on bonds payable
Ordinary shares, 5 par value 500,000
Ordinary share premium 125,000
Retained earnings 1,972,300
Total Liabilities and Shareholder's Equity 2,718,300

CASE 3
Payments of the acquirer includes the following:
Cash
Ordinary shares
Finder's fee
Stock issuance cost
Contingent liability of the acquiree

Compute the : a. Post combination assets

b. Goodwill (Bargain purchase gain)
c. Post combination liabilities

FV of the Consideration Transferred

Cash
Ordinary Shares 112,000.00
Fair value of net asset acquired
Cash
Accounts Receivable
Inventory
Equipment
Land
Patent
Accounts Payable
Contingent Liability
Goodwill (Bargain Purchase Gain)

Asawa Ko
 Pre
Cash 420,000
Accounts Receivable 336,000
Inventory 268,800
Prepaid expenses 53,800
Equipment 672,000
Land 806,400
Patent 161,300
Total Assets 2,718,300

Accounts Payable 121,000

Bonds payable
Estimated liability for contingent consideration
Ordinary Shares 500,000
Ordinary share premium 125,000
Retained earnings 1,972,300
Total Liabilities and Shareholder's Equity 2,718,300
015. On the date of combination, the companies reported the following data:

SamSam Baste Company

Fair Value Book Value Fair Value
126,000 28,000 28,000
210,000 42,000 58,800
196,000 14,000 21,000
- 280,000 -
420,000 (112,000) 196,000
952,000 252,000 303,800

112,000 28,000 28,000

-
28,000
7,000
189,000
112,000 252,000 28,000

quipment it owns which is currently worth at PhP 105,000 and 4,200 issuance of shares of stock in exchange for all net assets of Baste. Add
ditional shares shall be issued in order to compensate any loss, exceeding PhP 5 per share that is suffered by Baste from the decrease in fair
hP 40 with a 60% chance of occurence. The discount rate of 4% is to be used. Accounting and legal fees associated with the acquisitions am
hnological feasibility. Reminder: Avoid rounding off in the computation of PV factor, decimals matter.
207,852.37
140,000.00
1,033,152.37
553,652.37

70,000 Cash and receivables

105,000 Inventory
294,000 Land
84,652 553,652.37 Plant and equipment
294,000 Research and development
222,600 Accumulated depreciation
 71,400 Goodwill
40% Cash and receivables
28,560.00 Plant and equipment
0.9246 14,280 Accumulated profits
26,405.3254 Ordinary shares, ?28 par
Share premium
294,000 Share premium
189,000 Current liabilities
105,000
0.60 Accumulated profits
63,000.00 Cash and receivables
0.9246 21,000
58,247.0414

28,000
58,800
21,000
196,000
70,000
(28,000) 345,800
207,852

SamSam
Debit Credit Post
28,000 77,000 77,000
58,800 - 198,800
21,000 - 161,000
196,000 140,000 616,000
52,500 - (157,500)
70,000 - 70,000
207,852 - 207,852
1,173,152

- 28,000 140,000
- - -
- 117,600 397,600
- - -
- 261,052 289,052
7,000 17,500 346,500
 641,152 641,152 1,173,152

k in exchange for all the net assets of Baste. (Consider deferred taxes on temporary difference if tax rate is 30%)
462,000.00
155,540.00
1,191,540.00
201,740.00

70,000 Cash and receivables

392,000 462,000 Inventory
DTL (DTA) Land
- 28,000 Plant and equipment
5,040 58,800 Goodwill
2,100 21,000 Current liabilities
8,400 196,000 Deferred Tax Liability
- (28,000) Cash and receivables
(15,540) 260,260 Ordinary shares, ?28 par
201,740 Share premium

SamSam
Debit Credit Post
28,000 70,000 84,000
58,800 - 198,800
21,000 - 161,000
196,000 - 756,000
- - (210,000)
201,740 - 201,740
1,191,540

- 28,000 140,000
- 15,540 15,540
- 156,800 436,800
- - -
- 235,200 263,200
- - 336,000
1,191,540
0 bonds payable with an interest rate of 10% payable annually in 10 years, and issuance of 560 shares of stock in exchange for all the net
ary 1, 2017 which is equal to 150%of the amount by which average cash flows during the two-year period exceed PhP 20,000. The number
alue prevailing in January 1, 2017. As of the acquisition date, it was forecasted that cashflows during 2016 and 2017 will be PhP 40,000 and
msam in January 1, 2017 is estimated to be PhP45. The probability that the contingent event will not occur is 40% and the discount rate of
8%. Share issue cost and bond issue cost respectively amounted to PhP 7,000 and PhP 1,680 at acquisition date. Account for temporary
: Avoid rounding off in the computation of PV factor, decimals matter.

215,067.64
(45,192.36)
742,194.88
238,925.12

70,000 Cash and receivables

39,200 Inventory
85,065 Land
Plant and equipment
Current liabilities
Deferred Tax Liability
Accumulated profits
Cash and receivables
Ordinary shares, ?28 par
Share premium
Bonds payable
Premium in bonds payable
Share premium

Share Premium
Premium in bonds payable
Cash and receivables

Cash and receivables

Inventory
Land
Plant and equipment
Less: Accumulated depreciation
Goodwill
 Total Assets

Current liabilities
20,803 215,068 Deferred Tax Liability
Liability for contingent consideration
Bonds payable
Premium in bonds payable
Ordinary shares, ?28 par
Ordinary shares, ?7par
Share premium
Accumulated profits
Total liabilities and shareholder's equity

DTL (DTA)
- 28,000
5,040 58,800
2,100 21,000
8,400 196,000
- (28,000)
(15,540) 260,260
(45,192)

he net assets of Baste. Stock issuance cost amounted to PhP 14,000.

135,800.00
411,600.00
1,181,600.00
140,000.00
411,600 Cash and receivables
Inventory
Land
Plant and equipment
Goodwill
Ordinary shares, ?28 par
275,800 Share premium
 135,800 Current liabilities

SamSam Share premium

Debit Credit Post Cash and receivables
28,000 14,000 140,000
58,800 - 198,800
21,000 - 161,000
196,000 - 756,000
- - (210,000)
135,800 - 135,800
1,181,600

- 28,000 140,000
- 164,640 444,640
- - -
14,000 246,960 260,960
- - 336,000
453,600 453,600 1,181,600

ck in exchange for all the net assets of Baste. One half of the PhP 140,000 cash is payable at date of acquisition with the remainder payable
ntly made in January 1, 2017, in case a contingent event happened. The probability that the company will make the additionalpayment is 40
1,257,200.00
267,400.00
221,200.00
543,200.00

70,000 Cash and receivables

70,000 Inventory
392,000 Land
11,200 543,200 Plant and equipment
Goodwill
28,000 Current liabilities
58,800 Cash and receivables
21,000 Notes Payable
196,000 Ordinary shares, ?28 par
(28,000) 275,800 Share premium
267,400 Liability for contingent consideration

SamSam
 Debit Credit Post
28,000 70,000 84,000
58,800 - 198,800
21,000 - 161,000
196,000 - 756,000
- - (210,000)
267,400 - 267,400
1,257,200

- 28,000 140,000
- 70,000 70,000
- 11,200 11,200
- 156,800 436,800
- - -
- 235,200 263,200
- - 336,000
571,200 571,200 1,257,200

g all assets and assuming all liabilities of the latter. The trial balances of both entities, presented at book and fair values are as follow:

Asawa Ko Aking Mahal

Fair value Book value Fair value
420,000 168,000 168,000
326,000 134,400 130,000
271,000 107,500 108,000
None 86,000 None
650,000 215,000 209,000
895,000 258,000 286,000
179,000 51,600 57,000
121,000 38,700 38,700
250,000
62,500
112,500
646,800
90,000
 168,000
588,000
260,000
16,800
77,000

173,700.00
824,700.00
1,946,700.00
2,571,700.00
Cash
168,000 Accounts Receivable
588,000 Inventory
260,000 1,016,000 Equipment
Land
168,000 Patent
130,000 Goodwill
108,000 Discount on bonds payable
209,000 Retained Earning--> Gain on change on fair value
286,000 Cash
57,000 Bonds payable
(38,700) Equipment
(77,000) 842,300 Estimated liability for contingent consideration
173,700 Accounts Payable

Cost and expenses

Cash
Asawa Ko
Debit Credit Post
168,000 184,800 403,200
130,000 - 466,000
108,000 - 376,800
- - 53,800
209,000 268,800 612,200
286,000 - 1,092,400
57,000 - 218,300
173,700 - 173,700
- - 3,396,400

- 38,700 159,700
- 600,000 600,000
 12,000 - (12,000)
- 77,000 77,000
- - 500,000
- - 125,000
8,800 - 1,946,700
1,169,300 1,169,300 3,396,400

252,000
728,000
21,000
84,000

(23,300.00)
887,700.00

252,000 Cash
728,000 980,000 Accounts Receivable
Inventory
168,000 Equipment
130,000 Land
108,000 Patent
209,000 Research and development
286,000 Cash
57,000 Bonds payable
84,000 Premium on bonds payable
(38,700) 1,003,300 Bargain Purchase Gain
(23,300) Accounts Payable

Cost and expenses

Cash
Asawa Ko
Debit Credit Post
168,000 273,000 315,000
130,000 - 466,000
108,000 - 376,800
- - 53,800
209,000 - 881,000
286,000 - 1,092,400
 57,000 - 218,300
84,000 - 84,000
3,487,300

- 38,700 159,700
- 700,000 700,000
- 28,000 28,000
- - 500,000
- - 125,000
- - 1,974,600
1,063,000 1,063,000 3,487,300

189,000
560,000
26,460
13,860
98,000

3,446,980.00
(72,300.00)
257,700.00

189,000 Cash
560,000 749,000 Accounts Receivable
Inventory
168,000 Equipment
130,000 Land
108,000 Patent
209,000 Accounts Payable
286,000 Estimated liability for contingent consideration
57,000 Cash
(38,700) Ordinary Shares
(98,000) 821,300 Bargain Purchase Gain
(72,300)
Ordinary Share premium
Cost and expenses
Cash
Asawa Ko
Debit Credit Post
168,000 229,320 358,680
130,000 - 466,000
108,000 - 376,800
- - 53,800
209,000 - 881,000
286,000 - 1,092,400
57,000 - 218,300
3,446,980

- 38,700 159,700
- - -
- 98,000 98,000
- 560,000 1,060,000
13,860 - 111,140
- - 2,018,140
998,320 998,320 3,446,980
 ge for all net assets of Baste. Additional shares shall be contingently issued in January 1,
y Baste from the decrease in fair value of SamSam's shares. The probability that the shares
ssociated with the acquisitions amounted to PhP 7,000. Baste has an in-process research and

28,000
58,800
21,000
196,000
70,000
52,500
 207,852
70,000
140,000
17,500
117,600
176,400
-contingent consideration 84,652
28,000

7,000
7,000
 28,000
58,800
21,000
196,000
201,740
28,000
15,540
70,000
156,800
235,200
ock in exchange for all the net
exceed PhP 20,000. The number
and 2017 will be PhP 40,000 and
s 40% and the discount rate of
n date. Account for temporary

28,000
58,800
21,000
196,000
28,000
15,540
45,192
70,000
15,680
23,520
75,000
10,065
-contingent consideration 20,803

7,000
1,680
8,680
Sam Sam SamSam
Pre Debit Credit Post
126,000 28,000 78,680 75,320
140,000 58,800 - 198,800
140,000 21,000 - 161,000
560,000 196,000 - 756,000
ated depreciation (210,000) - - (210,000)
- - -
 756,000 981,120

112,000 - 28,000 140,000

- 15,540 15,540
ntingent consideration - - -
- 75,000 75,000
1,680 10,065 8,385
280,000 - 15,680 295,680
- - - -
28,000 7,000 44,323 65,323
336,000 - 45,192 381,192
and shareholder's equity 756,000 312,480 312,480 981,120

28,000
58,800
21,000
196,000
135,800
164,640
246,960
 28,000

14,000
14,000

sition with the remainder payable on January 1, 2016 as evidences with a

make the additionalpayment is 40%.

28,000
58,800
21,000
196,000
267,400
28,000
70,000
70,000
156,800
235,200
ntingent consideration 11,200
d fair values are as follow:
 168,000
130,000
108,000
209,000
286,000
57,000
173,700
12,000
nge on fair value 8,800
168,000
600,000
268,800
nt consideration 77,000
38,700

16,800
16,800
168,000
130,000
108,000
209,000
286,000
57,000
84,000
252,000
700,000
28,000
23,300
38,700

21,000
21,000
 168,000
130,000
108,000
209,000
286,000
57,000
38,700
nt consideration 98,000
189,000
560,000
72,300

13,860
26,460
40,320