PROBLEM 1.

WOOD CORPORATION

Number of shares issued 100,000

Market Value per share 35
CONSIDERATION TRANSFERRED 3,500,000

Consideration Transferred 3,500,000

FV of Net Assets Acquired 3,000,000
GOOD WILL 500,000

JOURNAL ENTRY:

Aug 1. Identifiable Assets 3,000,000

Good will 500,000
Share Capital (100,000 x 20) 2,000,000
Share Premium (100,000 x 15) 1,500,000

Aug 1. Share Premium 50,000

Cash in Bank 50,000

Aug 1. Professional Fees 200,000

Cash 200,000

PROBLEM 2. WHITE CORPORATION

Number of shares issued 50,000

Market Value per share 36
CONSIDERATION TRANSFERRED 1,800,000

Consideration transferred 1,800,000

FV of Net Assets Acquired - 1,550,000
GOOD WILL 250,000

JOURNAL ENTRY:

June 30, 2021

Accounts Receivable (net) 550,000
Inventory 400,000
PPE 1,600,000
Goodwill 250,000
Accounts Payable 300,000
Notes Payable 700,000
Share Capital 1,000,000
Share Premium 800,000
Share Premium 50,000
Cash in Bank 50,000

Broker Fees 100,000

Cash in Bank 100,000

PROBLEM 3. P COMPANY
Cash 500,000
Contingent Consideration 150,000
Shares Issued 3,000,000
Total Consideration Transferred 3,650,000
Less: FV of Net Assets Acquired
Cash 300,000
Accounts Receivable 980,000
Inventory 600,000
PPE 1,064,000
Liabilities -570,000 2,374,000
GOOD WILL 1,276,000

JOURNAL ENTRY:

Cash 300,000
Accounts Receivable (net) 980,000
Inventory 600,000
PPE 1,064,000
Goodwill 1,276,000
Liabilities 570,000
Cash 500,000
Share Capital 2,400,000
Share Premium 600,000
Contingent Liability 150,000

Share Premium 30,000

Cash 30,000

Brokerage Fee 50,000

Indirect Acquisition Cost 20,000
Cash 70,000

PROBLEM 4. CABLE COMPANY

1) Consideration Transferred 800,000
FV of Net Assets -755,000
GOOD WILL 45,000

JOURNAL ENTRY:

Current Assets 404,500

Plant Assets 690,000
Patent 48,000
Goodwill 45,000
Current Liabilities 107,500
Long-term Debt 280,000
Cash 800,000

2) Consideration 800,000
FMV of Net Assets -755,000
GOOD WILL 45,000

JOURNAL ENTRY:

Investment in Subsidiary 800,000

Cash 800,000

Consolidated FS entry:

Current Assets 404,500

Plant Assets 690,000
Patent 48,000
Goodwill 45,000
Current Liabilities 107,500
Long-term Debt 280,000
Investment in Subsidiary 800,000

3) Consideration 800,000
Non-controlling Interest (FV) 200,000
TOTAL 1,000,000
FMV of Net Assets Acquired -755,000
GOODWILL 245,000
JOURNAL ENTRY

Investment in Subsidiary 800,000

Cash 800,000

Consolidated FS Entry:

Current Assets 404,500

Plant Assets 690,000
Patent 48,000
Goodwill 245,000
Current Liabilities 107,500
Long-term Debt 280,000
Investment in Subsidiary 800,000
Non-controlling Interest in Cable Co. 200,000

4) Consideration 800,000
Non-controlling Interest 151,000
TOTAL 951,000
FMV of Net Assets Acquired -755,000
GOODWILL 196,000

JOURNAL ENTRY:

Investment in Subsidiary 800,000

Cash 800,000

Consolidated FS Entry:

Current Assets 404,500

Plant Assets 690,000
Patent 48,000
Goodwill 196,000
Current Liabilities 107,500
Long-term Debt 280,000
Investment in Subsidiary 800,000
Non-controlling Interest in Cable Co. 151,000

PROBLEM 5. MAJOR CORP.

Consideration Transferred 8,000,000

FMV of Net Assets Acquired -5,000,000
GOODWILL 3,000,000 not recognized in acquirer's books

1. 8,000,000

2. Journal Entry:

Investment in Subsidiary 8,000,000

Share Capital 6,000,000
Share Premium 2,000,000

PROBLEM 6. BLESSED CO.

Customer List 50,000

Operating Lease (favorable) 18,000
Identifiable R&D 100,000
Franchise 60,000
ACQUIRED INTANGIBLE ASSETS 228,000

PROBLEM 7. ACQUIRER CORP.

Consideration Transferred 600,000

FMV of Net Assets Acquired:
Cash 60,000
Inventory 150,000
Plant and Equipment (net) 380,000
Liabilities -120,000 470,000
GOODWILL 130,000

PROBLEM 8. ACQUIRER CORP.

Consideration Transferred 2,880,000

FMV of Net Assets Acquired:
Current Assets 1,100,000
Plant Assets 2,200,000
Liabilities -300,000 3,000,000
GAIN ON BARGAIN PURCHASE -120,000

PROBLEM 9. LOVE & HOPE COMPANY

1. @ FV METHOD
Consideration Transferred 510,000
NCI [(510,000 - 30,000)/75%) x 25%] 160,000
TOTAL 670,000
FMV of Net Assets -564,000
GOODWILL 106,000

2. @ PROPORTIONATE METHOD

Consideration Transferred 510,000

NCI (564,000 x 25%) 141,000
TOTAL 651,000
FMV of Net Assets - 564,000
GOODWILL 87,000

PROBLEM 10. LOVE AND HOPE COMPANY

Goodwill 33,000
FMV of Net Assets Acquired:
Cash 7,500
Inventories 15,000
PPE 76,500
Liabilities -7,500 91,500
TOTAL CONSIDERATION 124,500
Less: contingent consideration -18,000
CASH PAID BY LOVE COMPANY 106,500

Consideration Transferred 121,500

NCI [(121,500/90%)*10%] 13500
TOTAL 135,000
FMV of Net Assets -91,500
GOODWILL 43,500

PROBLEM 11. MATHEW CORPORATION

Previous purchase (10%)

2nd Purchase (70%)
NEW INTEREST (80%)

FV of previous interest (10%)

 (1,575,000/70%)*10% 225,000
Consideration (70%) 1,575,000
NCI [(1,800,000/80%)*20%)] 450,000
TOTAL 2,250,000
FMV of Net Assets -1,950,000
GOODWILL 300,000

JOURNAL ENTRY:

Equity Investment @FVTPL 20,000

Unrealized Gain/Loss 20,000

Investment in Subsidiary 1,800,000

Cash 1,575,000
EI @ FVTPL 225,000

PROBLEM 12. PHILIP COMPANY

July 01, 2022

Net Assets 28,000,000

Goodwill 4,000,000
Cash 32,000,000

December 31, 2022

Goodwill 1,000,000
Net Assets 1,000,000

March 31, 2023

Net Assets 2,000,000

Goodwill 2,000,000

May 31, 2023

Net Assets 1,000,000

Goodwill 1,000,000

Consideration 32,000,000
FMV of Assets -30,000,000
GOODWILL (ADJUSTED) 2,000,000
December 31, 2023

Impairment Loss 200,000

Goodwill 200,000

Amount of Goodwill as of Dec. 31, 2023 1,800,000

EXTRA PROBLEMS:

Problem 13.

Consideration Transferred (100,000 x 2.15) 215000

FMV of Net Assets:
Cash 50,000
Furniture and fittings 25,000
Accounts Receivable 5,000
Plant 125,000
Accounts Payable -15,000
Current tax liability -8,000
Provision for annual leave -2,000 180,000
GOODWILL (Acquisition Date) 35,000

JOURNAL ENTRY:
JUNE 1, 2021
Net Assets 205,000
Goodwill 10,000
Share Capital 215,000

MARCH 1, 2022
Net Assets 5,000
Goodwill 5,000

Consideration Transferred (100,000 x 2.15) 215,000

FMV of Net Assets:
Cash 50,000
Furniture and fittings 25,000
Accounts Receivable 5,000
Plant 130,000
Accounts Payable -15,000
Current tax liability -8,000
Provision for annual leave -2,000 185,000
GOODWILL (December 31, 2022) 30,000
Problem 14.

Consideration (8,000 x 500) 4,000,000

FMV of Net Assets:
Assets 6,400,000
Liabilities -3,600,000 2,800,000
GOODWILL 1,200,000

Legal Fees 40,000

Due diligence costs 400,000
Gen Administrative Expenses 80,000
TOTAL EXPENSES CHARGED TO P/L 520,000

JOURNAL ENTRY:

January 1, 2022

Assets 6,400,000
Goodwill 1,200,000
Liabilities 3,600,000
Share Capital 3,200,000
Share Premium 800,000

Share Premium 180,000

Legal Fees 40,000
Due Diligence Costs 400,000
Gen Administrative Expenses 80,000
Cash 700,000
Consideration 800,000
Divided by: controlling interest 80%
1,000,000
% of non-controlling interest 20%
NON-CONTROLLING INTEREST FV 200,000
FVM of Net Assets 755,000
Multiply: % of non-controlling interest 20%
NON-CONTROLLING INTEREST 151,000
in acquirer's books