Below is the condensed Statement of Financial Position of Sons, Inc.

, along with estimates of fair

values. Pop, Inc. is planning to acquire Sons by issuing 100,000 shares of its P1 par value ordinary
shares (market value P8/share) in exchange for all the assets and liabilities of Sons. Pop also
guarantees the value of its shares issued. The expected present value of this stock price contingency
is P200,000. Pre-Combination Condensed Statement of Financial Position of Sons, Inc. Book value
Fair value Current assets P 380,000 P 350,000 Plant assets ___740,000 810,000 Total assets
P1,120,000 Liabilities P 500,000 450,000 Ordinary shares 50,000 Share premium 170,000 Retained
earnings ___400,000 Total liabilities and equity P1,120,000 Required: Prepare Pops’
(acquirer/acquiring) entry(ies) to record the acquisition.

35.. Westport Ltd., a supplier of snooker equipment, agreed to acquire the business of a rival firm,
Manukau Ltd. taking over all assets and liabilities as at 1 June 20x4.

The price agreed upon was P40,000, payable P20,000 cash and the balance by the issue to the
selling company of 16,000 fully paid shares in Westport Ltd. these shares having a fair value of P2.50
per share.

The trial balances of the two companies as at 1 June 20x4 were as follows.

Westport Ltd.
Manukau Ltd.
Dr. Cr. Dr.
Cr.
Share capital P100,000
P 90,000
Retained earnings 12,000 P 24,000
Accounts payable 2,000
20,000
Cash P30,000 -
Plant (net) 50,000 30,000
Inventory 14,000 26,000
Accounts receivable 8,000 20,000
Government bonds 12,000 -
Goodwill - -
.
P114,000 P114,000 P110,000
P110,000
All the identifiable net assets of Manukau Ltd. were recorded by Manukau Ltd. at fair value except for
the inventory which was considered to be worth P28,000. The plant had an expected remaining life of
five years.

The business combination was completed and Manukau Ltd. went into liquidation. Westport Ltd.
incurred incidental costs of P500 in relation to the acquisition costs. Costs of issuing shares in
Westport Ltd. were P400. The amount of goodwill to:

a. Nil or zero
b. P2,500
c. P2,900
d. P3,900