PACMAN Corporation and RIOS Company have announced terms of an exchange agreement

under which PACMAN will issue 8,000 shares of its P40 par value common stock to acquire all
the assets of RIOS Company. PACMAN shares currently are trading at P50, and RIOS P5 par
value shares are trading at P18 each. In addition, PACMAN Corporation incurred P50,000 for
finder’s fee and P40,000 for stock issuance cost. Book value and fair value balance sheet data on
January 1, 2021, are as follows:
PACMAN Corporation RIOS Company
Balance sheet item Book value Fair value Book value Fair value

Cash P150,000 P150,000 P 40,000 P 40,000

Inventory 80,000 100,000 50,000 80,000
Investment 120,000 150,000 80,000 100,000
Land 100,000 170,000 50,000 85,000
Buildings & Equipt. 300,000 400,000 160,000 230,000
Accu. Depreciation ( 80,000) (50,000)___________
Total assets P670,000 P970,000 P330,000 P535,000
Accounts Payable P150,000 P160,000 P 90,000 P100,000
Common stock 200,000 100,000
APIC 20,000 10,000
Retained earnings 300,000 130,000
Total Equities P670,000 P330,000
Required:
a. Journal entries on the books of PACMAN Corporation to record the acquisition.
b. Journal entries to dissolve RIOS Company.
c. What will be the amount reported immediately following the business combination for
each of the following items in the combined company’s balance sheet.
1. Assets
2. Additional Paid-in-Capital
3. Retained earnings
4. Stockholders’ Equity