Prepare the journal entries on AR Corporation’s books.

1. By paying cash (Assume the following purchase prices):

a. 950,000
Consideration Given 950,000
Fair Value of net assets 970,000
Gain on acquisition - 20,000

Accounts Receivable 20,000

Notes Receivable 130,000
Inventory 120,000
Buildings 400,000
Equipment 200,000
Land 200,000
Current Liability 15,000
Long-term Liability 85,000
Cash 950,000
Gain on acquisition 20,000

Acquisition expense 26,000

Cash 26,000

b. 1,000,000
Consideration Given 1,000,000
Fair Value of net assets 970,000
Goodwill 30,000

Accounts Receivable 20,000

Notes Receivable 130,000
Inventory 120,000
Buildings 400,000
Equipment 200,000
Land 200,000
Goodwill 30,000
Current Liability 15,000
Long-term Liability 85,000
Cash 1,000,000

Acquisition expense 26,000

Cash 26,000

c. 860,000
Consideration Given 860,000
Fair Value of net assets 970,000
Gain on acquisition - 110,000

Accounts Receivable 20,000

Notes Receivable 130,000
Inventory 120,000
Buildings 400,000
Equipment 200,000
Land 200,000
Current Liability 15,000
Long-term Liability 85,000
Cash 860,000
Gain on acquisition 110,000

Acquisition expense 26,000

Cash 26,000
 1.       Assume that AR Corporation issued 100,000 shares of its P10 par common stock with a fair value of P12 per share fo
additional out-of-pocket costs:
Accounting fees for SEC registration statement
of AR Corp.’s common stock P 6,000
Legal fees for SEC registration statement for
AR Corp.’s common stock 4000
Printer’s charges for printing securities and
SEC registration statement 5000
SEC registration statement fee 5000
Total P20,000

Consideration given (100,000 shares x 12) 1,200,000.00

Fair value of net assets 970,000.00
Goodwill 230,000.00

Accounts Receivable 20,000

Notes Receivable 130,000
Inventory 120,000
Buildings 400,000
Equipment 200,000
Land 200,000
Goodwill 230,000
Current Liability 15,000
Long-term Liability 85,000
Common stock 1,000,000
APIC 200,000

APIC 20,000
Cash 20,000
 h a fair value of P12 per share for the net assets of AE Corporation. The acquirer incurred the following
nal out-of-pocket costs:

P20,000
 1. Prepare the journal entries on AR Corporation’s books to account for the purchase of 100% interests of AE Corporation f
a.       P 950,000
Consideration given 950,000.00
Less: Book Value of interest acquired (100%)
Common Stock 600,000.00
APIC 200,000.00
Retained Earnings 95,000.00 895,000.00
Goodwill 55,000.00

Investment in AE Corporation 95,000.00

Cash 95,000.00

b. 1,000,000
Consideration given 1,000,000.00
Less: Book Value of interest acquired (100%)
Common Stock 600,000.00
APIC 200,000.00
Retained Earnings 95,000.00 895,000.00
Goodwill 105,000.00

Investment in AE Corporation 105,000.00

Cash 105,000.00

c. 860,000
Consideration given 860,000.00
Less: Book Value of interest acquired (100%)
Common Stock 600,000.00
APIC 200,000.00
Retained Earnings 95,000.00 895,000.00
Gain on Bargain Purchase - 35,000.00

Investment in AE Corporation 35,000.00

Cash 35,000.00
erests of AE Corporation for the following purchase prices:
 1.       Assuming that AR Corporation is an SME, prepare the journal entry to record the purchase of all AE Corporatio

Consideration Given 950,000

Fair Value of net assets 970,000
Gain on acquisition - 20,000

Accounts Receivable 20,000

Notes Receivable 130,000
Inventory 120,000
Buildings 400,000
Equipment 200,000
Land 200,000
Current Liability 15,000
Long-term Liability 85,000
Cash 950,000
Gain on acquisition 20,000
e purchase of all AE Corporation’s outstanding stocks for P950,000.