SET B

Problem 1

The statement of Financial Position of Sano Corporation on January 1, 2025 is presented below:

Current assets 1,170,000.00

Land 7,920,000.00
Building 3,960,000.00
Equipment 3,150,000.00

Liabilities 3,150,000.00
Ordinary shares 5 per share 5,400,000.00
Share premium 4,950,000.00
Retained Earnings 2,700,000.00
Total Equities 16,200,000.00

Additional information:

 All the assets and liabilities of Sano assumed to approximate their fair value except for land and
building.
 It is estimated that the land has a fair value of 12,600,000.00 and the fair value of the building
increased by 2,880,000.00

Salah Corporation acquired 80% of Sano’s outstanding shares for 18,000,000.00. The non-controlling
interest is measured at fair value.

Independent case:

Case 1

Assuming that the fair value of NCI is P3,000,000.00, how much is the goodwill (gain on acquisition) on
the consolidated financial statement? (5 points)

And prepare all required entries below:

1.Prepare the Actual entries, books of Salah. (2 points per correct Journal Entry)

2. Prepare Elimination entries, recognizable FV adjustments of assets and liabilities,

and recognizable Goodwill or Gain on Purchase and NCI. (5 points)

Case 2
Assuming that the consideration paid includes control premium of 5,112,000.00, how much is the
goodwill (gain on acquisition) on the consolidated financial statement? (5 points)

NO ENTRIES REQUIRED. ANSWER DIRECTLY CASE 2.

Problem 2.

On January 1, 2025, Beno Company has gained control over the operation of Mare Corporation by
acquiring 90% of its outstanding capital stock for P3,600,000.00. This amount excludes a control
premium of P30,000.00. Out of pocket costs include unpaid direct cost P90,000.00, paid indirect cost of
P50,000.00 and paid direct costs of P60,000.00. The contingent consideration, which is determinable, is
equal to P50,000.00. On December 1, 2025, the Contingent Consideration has determinable amount of
P60,000.00

Beno Mare
Book Value Book Value
Cash 3,541,500.00 128,000.00
Accounts Receivable 300,000.00 325,000.00
Inventories 550,000.00 360,000.00
Prepaid Expenses 148,500.00 125,000.00
Land 2,350,000.00 879,000.00
Building 1,560,000.00 558,000.00
Equipment 300,000.00 185,000.00
Goodwill - 300,000.00

Total assets 8,750,000.00 2,860,000.00

Accounts payable 675,000.00 253,000.00

Notes Payable 1,400,000.00 730,000.00
Share Capita, P50 par 3,400,000.00 800,000.00
Share Premium 1,575,000.00 600,000.00
Retained Earnings 1,700,000.00 477,000.00
Total Equities 8,750,000.00 2,860,000.00

The following was ascertained on the date of acquisition of Mare Corporation:

 The value of receivables and equipment has increased by P25,000.00 and P14,000.00
respectively.
 The fair value of inventories is now P450,000.00 whereas the value of land and building has
decreased by P400,000.00 and P100,000.00 respectively.
  There was an unrecorded accounts payable amounting to P30,000.00 and the fair value of notes
is P700,000.00
 The company measures the NCI based on the proportionate share
 The fair value of NCI is P410,000.00

Compute for the following balances to be presented in the consolidated statement of financial
position at the end of the year:

1. Total assets (8 points)

2. Total liabilities (8 points)

Total shareholder’s equity (8 points)