ADVANCE ACCOUNTING 2015 | ANTONIO DAYAG JR.

Chapter 15
Problem I
Investment in Shy Inc. [P2,500,000 + (15,000  P40)] 3,100,000
Cash 2,500,000
Common Stock 30,000
Paid in capital in excess of par (P40 - P2)  15,000 570,000

Paid in capital in excess of par 30,000

Acquisition Expense 67,000
Deferred Acquisition Charges 90,000
Acquisition Costs Payable 7,000

Problem II
Cash consideration transferred P 300,000
Contingent performance obligation __15,000
Fair value of Subsidiary P 315,000
Less: Book value of SS Company (P90,000 + P100,000) 190,000
Allocated excess P125,000
Less: Over/under valuation of assets and liabilities:
Increase in building: P40,000 x 100% P 40,000
Increase in customer list: P22,000 x 100% 22,000
Increase in R&D: P30,000 x 100% 30,000 __92,000
Goodwill P 33,000

Investment in SS Company 315,000

Cash 300,000
Estimated Liability on Contingent Consideration 15,000

Acquisition Expense (or Retained earnings) 10,000

Cash 10,000
Not Required: The working paper eliminating entry on the date of acquisition, 6/30/20x4 would be:
Receivables 80,000
Inventory 70,000
Buildings 115,000
Equipment 25,000
Customer list 22,000
Capitalized R&D 30,000
Goodwill 33,000
Current liabilities 10,000
Long-term liabilities 50,000
Investment in SS Company 315,000