NAME: MAHUSAY, JETH A.

DATE: OCTOBER 2020

INSTRUCTOR: MS. ANNA MAE MAGBANUA, CPA COURSE/YR: BSA- 3
SUBJECT: ACCTG FOR BUSINESS COMBINATION

MODULE 1
CASELETS

Lesson 1

Case 1
Determine the cost of business combination.

100,000 x 25 = P 2,500,000
25,000,000 X .50 = 12,500,000
12,500,000 x 0.91 = 11,375 000
Acquisition cost P26, 375, 000

*PV OF 1, 10%, 1yr = 91%

Case 2
What is the amount of goodwill or gain on bargain purchase that union
company will record resulting from the business combination?

Acquisition cost P1, 600,000

Less: FV of identifiable net assets
Cash P 160,000
Inventory 460,000
PPE 1,040,000
Liabilities (360,000) 1,300,000
Goodwill P 300,000
Case 3
In the books of JPIA CO. how much is the goodwill or gain on bargain
purchase will result from this transaction?

Acquisition cost P1, 400,000

Less: FV of identifiable net assets
Cash P 36,000
Accounts receivable 457,000
Inventory 133,000
PPE 900,000
Accounts payable (350,800)
Contingent liability (10,000) 1,165,200
Goodwill P 234,800

Case 4
What should magna present for goodwill in its statement of financial position at
July 13, 2013 and December 31, 2014 according to IFRS 3?

Acquisition cost P160, 000,000

Less: FV of identifiable net assets (120,000,000)
Goodwill, July 31, 2013 P40, 000,000
Less: FV adjustment (140M – 120M) (20,000,000)
Goodwill, December 31, 2014 P20, 000,000

Case 5
A. Benz books
Current assets 100,000
Land 75,000
Building 300,000
Equipment 275,000
Goodwill 152,000
Cash 800,000
Liabilities 102,000

Retained earnings 15,000

 Cash 15,000

B. Cardinal’s books
Cash 800,000
Liabilities 100,000
Accumulated depreciation – bldg. 200,000
Accumulated depreciation – equip 100,000
Current assets 80,00
0
Land 50,00
0
Building 450,00
0
Equipment 300,00
0
Gain on sale 320,00
0

C. Benz books
Investment in subsidiary 800,000
Cash 800,000

Case 6
A. Rosben’s books
1. Cash 10,000
Receivables 40,000
Inventories 245,000
PPE 250,000
Goodwill 80,000
Accounts payable 140,00
0
Bonds payable 85,00
0
Ordinary shares 100,00
0
Share premium 300,00
0
 Retained earnings 85,000
Share premium 40,000
Cash 125,00
0

2. Shareholder’s equity, before business combination P1,200,000

Issued shares at FV 400,000
Cost to register and issue stocks (40,000)
Shareholder’s equity, after business combination P1, 560,000

B. Rosben’s books
1. Cash 10,000
Receivables 40,000
Inventories 245,000
PPE 250,000
Accounts payable 140,000 Bonds payable 85,000
Ordinary shares 100,000
Share premium 100,000
Gain on bargain purchase 120,000

Retained earnings 85,000

Share premium 40,000
Cash 125,000

2. Shareholder’s equity, before business combination P1, 200,000

Issued shares at FV 200,000
Gain on bargain purchase 120,000
Cost to register and issue stocks (40,000)
Shareholder’s equity, after business combination P1, 480,000

LESSON 2
Case 1
A. Investment in subsidiary 600,000
Cash 600,000
 B. Investment in subsidiary 90,000
Goodwill 510,000
Cash 600,000

Case 2
A.
Capital stocks 100,000
Share premium 20,000
Retained earnings 25,000
Investment in subsidiary 145,000

Goodwill 15,000
Investment in subsidiary 15,000

B. Capital stocks 100,000

Share premium 80,000
Retained earnings 30,000
Investment in subsidiary 150,000

Investment in subsidiary 10,000

Retained earnings 10,000

C. Capital stocks 100,000

Share premium 40,000
Retained earnings 5,000
Investment in subsidiary 101 250
Non-controlling interest 33 750

Goodwill 18 750
Investment in subsidiary 18 750

D. Capital stocks 100,000

Share premium 50,000
Retained earnings 10,000
Investment in subsidiary 128,000
Non-controlling interest 32,000
 Land 40,000
Investment in subsidiary 32,000
Non-controlling interest 8,000

E. Capital stocks 100,000

Share premium 15,000
Retained earnings 5,000
Investment in subsidiary 108,000
Non-controlling interest 12,000

Land 20,000
Investment in subsidiary 18,000
Non-controlling interest 2,000

Goodwill 24,000
Investment in subsidiary 24,000

Case 3
FV of subsidiary 524 286
Less: FVNA (140 000)
Full Goodwill P 114,286

 P128 000/ 70%= 524 286

Share of controlling interest in goodwill

114,286 x 70%
= 80,000
FV of non-controlling interest
254,286 x 30%
= 76,286

Parlor Corporation and Subsidiary

Consolidated Working Paper
As of January 1, 2014

Accounts Parlor Setting Elimination Consolidated

 FS
Cash 32,000 20,000 52,000
Receivables 80,000 30,000 (5,000) 105,000
Inventories 70,000 30,000 100,000
Investment in
178,000 (178,000) –
Setting
Land 100,000 50,000 10,000 160,000
Building 110,000 70,000 20,000 200,000
Equipment 80,000 40,000 (10,000) 110,000
Goodwill 114,286 114,286
Total P 841,286
Accounts payable
90,000 80,000 (5,000) 165,000
Other liabilities 10,000 50,000 (10,000) 50,000
Ordinary shares 500,000 100,000 (100,000) 500,000
Retained earnings
50,000 10,000 (10,000) 50,000
NCI 76,286 76,286
P 841,286

Eliminating entries
Accounts payable 5,000
Receivables 5,000

Ordinary shares 100,000

Retained earnings 10,000
Goodwill 114,286
Land 10,000
Building 20,000
Other liabilities 10,000
Equipment 10,000
Investment in Setting 178,000
Non-controlling interest (NCI) 76,286

Parlor and Setting Corp.

Consolidated Statement of Financial Position
January 1, 2014
 Cash P 52,000
Receivables 105,000
Inventories 100,000
Land 160,000
Building 200,000
Equipment 110,000
Goodwill 114,286
Total P841,286

Accounts payable P165,000

Other liabilities 50,000
Ordinary shares 500,000
Retained earnings 50,000
NCI 76,286
Total P841,286

Partial and Full Goodwill Computation with Control Premium

Case 1
PV Partial goodwill

a) FV of acquisition Cost P 6,300,000

Less: FVNA (4,200,000)
Goodwill P2, 100,000
*7,000,000 x 60%= 4,200,000

Full goodwill
b) FV of acquisition Cost P 6,300,000
Add: FVNA 4,000,000
Less: FVNA (7,000,000)
Goodwill P 3,300,000
*3,330,000-2,100,000 +2,800,000= 4,000,000

c. NCI Full Goodwill

=P 4,000,000

d. NCI Partial Goodwill

=P 2,800,00
Case 2

Partial goodwill
a. FV of Acquisition Cost P 7,500,000
Less: FVNA (6,000,000)
Partial goodwill P1,500,000
*8,000,000 x 75%= P6,000,000

Full goodwill
b) FV of Acquisition Cost P 9,700,000
Less: FVNA (8,000,000)
Full goodwill P1,700,000

c) Full goodwill P 1,700,000

Less: Partial goodwill (1,500,000)
Share of NCI on goodwill P 200,000
Add: FVNA 2,000,000
FV of NCI (full) P2,200,000

d) FV of identifiable net assets P 8,000,000

Multiply: NCI 25%
Non-controlling interest (partial) P2, 000,000