Acco 30023 Accounting For Business Combinations Midterm Reviewer

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ACCO 30023 Accounting for Business Combinations Midterm

Reviewer
ACCOUNTANCY (Our Lady of Fatima University)
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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

College of Accountancy and Finance Student Council
CAF Review
ACCO 30023: ACCOUNTING FOR BUSINESS COMBINATIONS
(Midterm Examinations)
THEORIES: Select the best answer for each of the following.
1. Statement 1 (S1): In an acquisition of assets for assets, the ownership structure of the
acquirer changes.
Statement 2 (S2): There is an increase in the total capitalization of an acquirer when
the acquirer issues stock for acquiree assets.
A. S1 - True; S2 – True
B. S1 - True; S2 - False
C. S1 - False; S2 - True
D. S1 - False: S2 – False
2. Which of the following is not a business combination?

A. Statutory amalgamation
B. Joint venture
C. A company's purchase of 100% of another company's net assets
D. A company's purchase of 80% of another company’s voting shares
3. Which of the following is not a reason why a private enterprise may be acquired as a
bargain purchase?
A. It is a family business and the next generation does not want to continue the
business.
B. The owner has health problems and does not have a successor.
C. The business only has equity financing and has no debt financing.
D. The owner is no longer interested in the business
4. When the acquisition price of on acquired firm is less than the fair value of the
identifiable net assets, all of the following recorded at fair value except
A. Assumed labilities
B. Current assets
C. Long-lived assets
D. Each of the above is recorded at fair value
5. Enchanted Corporation and Delicate Company, both publicly owned companies, are
planning a merger, with Enchanted being the survivor. Which of the following is a
requirement of the merger?
A. The Securities and Exchange Commission must approve the merger.
B. The common stockholders of Delicate must receive common stock of Enchanted.
C. The creditors of Delicate must approve the merger.
D. The boards of directors of both Enchanted and Delicate must approve the merger.
6. According to IFRS 10, these refer to financial statements of a group in which the
assets, liabilities, equity, income, expenses and cash flows of the parent and its
subsidiaries are presented as those of a single economic entity.
A. Separate financial statements
B. General purpose financial statements
C. Consolidated financial statements
D. Group financial statements

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7. According to IFRS 10, an investor controls an investee if and only if the investor has
all of the following elements except:
A. Power over the investee
B. Exposure, or rights, to variable returns from its involvement with the investee
C. The ability to use its power over the investee to affect the amount of the investor's
returns.
D. Holds protective rights as an investor.
8. An entity acquired an investment in a subsidiary with the view to dispose of the

investment within six months. The investment in the subsidiary has been classified as
held for sale. How should the investment in the subsidiary be treated in the financial
statements?
A. Acquisition accounting should be used.
B. The subsidiary should not be consolidated but IFRS 5 should be used.
C. The subsidiary should be derecognized.
D. Equity accounting should be used.
9. An investor has a power over the investee when:

A. It has existing rights that give it the current ability to direct the relevant activities.
B. It is exposed, or has rights, to variable returns from its involvement with the
investee.
C. It has the practical ability to affect the returns through its power over the investee.
D. None of the above.
10. Control is presumed to exist when the parent owns directly or indirectly through
subsidiaries
A. More than half of the preference and ordinary shares of an entity.
B. More than half of voting power of an entity.
C. More than half of the ordinary shares of an entity.
D. More than half of the equity of an entity.
11. Which of the statements is true?

I. At the date of consolidation, the debit differential consists solely of one item—in
this example that one item is an expense.
II. There are no intercompany transactions at the date of consolidation
III. The subsidiary’s stock and the related stockholders’ equity accounts must be
eliminated because the stock of the subsidiary is held entirely within the
consolidated entity and none represents claims by outsiders.
IV. The investment account must be eliminated because, from a single entity viewpoint,
a company cannot hold an investment in itself.
A. I, III, IV
B. I, II, IV
C. II, III, IV
D. I, II, III

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12. A majority-owned subsidiary that is in legal reorganization should normally be

accounted for using:
A. consolidated financial statements.

B. the equity method.
C. the market value method.
D. the cost method
13. In a business combination accounted for as an acquisition, registration costs related

to common stock issued by the parent company are:
A. expensed as incurred.
B. deducted from other contributed capital.
C. included in the investment cost.
D. deducted from the investment cost
14. On the consolidated balance sheet, consolidated stockholders' equity is:

A. equal to the sum of the parent and subsidiary stockholders' equity.
B. greater than the parent's stockholders' equity.
C. less than the parent's stockholders' equity.
D. equal to the parent's stockholders' equity.
15. Which of the following is a limitation of consolidated financial statements? Select one:
A. Consolidated statements provide no benefit for the stockholders and creditors of the
parent company.
B. Consolidated statements of highly diversified companies cannot be compared with
industry standards.
C. Consolidated statements are beneficial only when the consolidated companies
operate within the same industry.
D. Consolidated statements are beneficial only when the consolidated companies
operate in different industries.
16. Which one of the following accounts would not appear in the consolidated financial
statements at the end of the first fiscal period of the combination?
A. Additional Paid-In Capital
B. Investment in Subsidiary
C. Goodwill
D. Common Stock
17. Consolidated net income using the equity method for an acquisition combination is
computed as follows:
A. Parent company’s income from its own operations plus the equity from subsidiary’s
income recorded by the parent.
B. Combined revenues less combined expenses less equity in subsidiary’s income less
amortization of fair-value allocations in excess of book value.
C. Parent’s revenues less expenses for its own operations plus the equity from
subsidiary’s income recorded by parent.
D. All of the above.

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18. When a company applies the initial method in accounting for its investment in a
subsidiary and the subsidiary reports income in excess of dividends paid, what entry
would be made for a consolidation worksheet?
A. Dr. Retained Earnings, Cr. Investment in Subsidiary
B. Dr. Retained Earnings, Cr. Additional Paid-In Capital
C. Dr. Investment in Subsidiary, Cr. Retained Earnings
D. Dr. Investment in Subsidiary, Cr. Equity in Subsidiary’s Income
19. When a company applies the initial value method in accounting for its investment in
a subsidiary and the subsidiary reports income less than dividends paid, what entry
would be made for a consolidation worksheet?
A. Dr. Retained Earnings, Cr. Investment in Subsidiary
B. Dr. Retained Earnings, Cr. Additional Paid-In Capital
C. Dr. Investment in Subsidiary, Cr. Retained Earnings
D. Dr. Investment in Subsidiary, Cr. Equity in Subsidiary’s Income
20. Under the initial value method, when accounting for an investment in a subsidiary,
A. Dividends received by the subsidiary decrease the investment account.
B. The investment account remains at initial value.
C. Income reported by the subsidiary increases the investment account.
D. The investment account is adjusted to fair value at year-end.
PROBLEMS: Select the best answer for each of the following.
1. Blank Space Co. is acquiring Love Story Inc. Love Story has the following intangible
asset:
a. Patent on a product that is deemed to have no useful life, P100,000.
b. Customer list with an observable fair value of P80,000.
c. A 5-year operating lease with favorable terms with a discounted present value
of P25,000.
d. Identifiable R & D of P150,000.
e. Goodwill of 300,000.
f. Franchise of P80,000.
g. Right of use machinery, held for production, P500,000.
Blank Space Co. will record how much for acquired Intangible Assets from the
purchase of Love Story Inc.?
A. P160,000
B. P185,000
C. P310,000
D. P335,000
2. On January 2, 2021, Gorgeous Company purchased the net asset of Lover Company
by paying P500,000 cash and issuing 100,000 shares of stocks at P3,000,000 fair
market value. The par value of Gorgeous Company's shares is P24 per share. Book
value and fair value data on the Statement of Financial Positions on January 2, 2021
are as follows:

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Gorgeous incurred and paid legal and brokerage fees of P50,000 for business
combination; share issue costs of P30,000 and P20,000 indirect acquisition costs. It
is determinable that contingency fee of P150,000 (estimated fair value) would be
paid within the year. How much is the Goodwill or Gain on Bargain Purchase?
A. P1,126,000
B. P1,276,000
C. P1,326,000
D. P1,376,000
3. Using the information in No. 2, assuming that Gorgeous Company is an SME, how
much is the Goodwill or Gain on Bargain Purchase?
A. P1,126,000
B. P1,276,000
C. P1,326,000
D. P1,376,000
4. On January 1, 2020, Drei Co. acquired all of the identifiable assets and assumed all
liabilities of Cerise, Inc. by paying P4,800,000. On this date, identifiable assets and
liabilities assumed have fair value of P7,680,000 and P4,320,000, respectively. Terms
of the agreement are as follows:
a. 20% of the price shall be paid on January 1, 2020 and the balance on
December 31, 2021 (the prevailing market rate on the same date is 10%).
b. the acquirer shall also transfer its piece of land with book and fair value of
P2,400,000 and P1,440,000, respectively.
Included in the liabilities assumed is an estimated warranty liability. The carrying
amount and fair value of this warranty liability amounted to P576,000 and P468,000,
respectively. The acquiree guarantees that the warranty liability would only be settled
for P480,000. How much is the consideration transferred?
A. P2,400,000
B. P4,133,376
C. P4,800,000
D. P5,573,376

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5. Using the information in No. 4, how much is the goodwill on the business
combination?
A. P2,105,376
B. P2,201,376
C. P2,213,376
D. None of the above
6. Del Valle Company paid P150,000 for its 75% interest in Enrile Company. Del Valle
elected to value NCI at fair value. Enrile’s net identifiable assets approximated their
fair values at acquisition date. The acquisition resulted in a goodwill attributable to
NCI of P10,000.
Since the acquisition date, Enrile has made accumulated profits of P200,000. There
have been no changes in Enrile’s share capital since acquisition date. The group
determined that goodwill has been impaired by P8,000. Since the acquisition date,
Enrile has made accumulated profits of P200,000. There have been no changes in
Enrile’s share capital since acquisition date. The group determined that goodwill has
been impaired by P8,000. A summary of the individual statements of financial
positions of the entities as at the end of reporting period is shown below:
Del Valle Company Enrile Company

Total Assets P 1,000,000 P 500,000
Total Liabilities 200,000 120,000
Share capital 300,000 100,000
Retained earnings 500,000 280,000
Total Liabilities and equity P 1,000,000 P 500,000
How much is the fair value assigned to NCI at the date of acquisition?
A. P55,000
B. P76,000
C. P98,000
D. P112,000
7. Using the information in No. 6, how much is the goodwill at the end of reporting
period?
A. P9,000
B. P13,000
C. P15,000
D. P17,000
8. Using the information in No. 6, how much is the NCI in net assets?
A. P89,000
B. P103,000
C. P95,000
D. P112,000

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9. Using the information in No. 6, how much is the consolidated retained earnings?
A. P556,000
B. P628,000
C. P644,000
D. P702,000
10. Using the information in No. 6, how much is the consolidated total assets?
A. P1,402,000
B. P1,387,000
C. P1,367,000
D. P1,298,000
11. On January 1, 2021, Siri Company purchased 90% of the outstanding shares of Alexa
Company for P16,000,000. Siri Company also paid P500,000 as direct costs
attributable to the acquisition. Siri Company was also obligated to pay additional
P4,000,000 to the stockholders of Alexa company at the end of the year if Alexa
Company maintained existing profitability and it is highly probable that Alexa
Company would achieve this expectation. The fair value of the contingent
consideration is P4,000,000. NCI is measured at proportionate share.
Siri Company Alexa Company

Book Value Book Value FV
Cash & CE P 18,000,000 P 1,500,000 P 1,500,000
Accounts Receivables 6,500,000 3,500,000 3,300,000
Inventory 9,500,000 5,000,000 4,600,000
Plant & Equipment 20,000,000 10,000,000 12,000,000
Other Assets 1,200,000 800,000 500,000
Total Assets P 55,200,000 P 20,800,000 P 21,900,000
Compute for the NCI.
A. P1,880,000 B. P1,990,000 C. P1,050,000 D. P1,060,000
12. Using the data in No. 11, how much is the goodwill?
A. P1, 780,000 B. P3,080,000 C. P2,090,000 D. P1,980,000
13. On January 1, 2021, Ferreira Company issued 300,000 shares of its P18 par ordinary
share for all Lorenzo Company’s common stock. The shares have a market price of
P20 per share. Data below presents the shareholder’s equity before the consolidation:
Ferreira Company Lorenzo Company

Ordinary Share P3,000,000 P1,500,000
Ordinary Share Premium 1,300,000 150,000
Retained Earnings 2,500,000 850,000
P6,800,000 P2,500,000

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Ferreira Company incurred finder’s fee amounting to P30,000 and share issuance
costs of P35,000. At the date of acquisition, the total consolidated equity should be
reported at:
A. P12,855,000
B. P12,900,000
C. P12,735,000
D. P10,355,000
14. On January 1, 2021, Yuchengco Company acquired 75% interest in Arellano

Company for P2,500,000 cash. Yuchengco Company incurred transaction costs of
P250,000 for legal, accounting and consultancy fees in negotiating the business
combination. NCI is measured at proportionate share in Arellano Company’s
identifiable net assets. The carrying amounts and fair values of Arellano Company’s
assets and liabilities at the acquisition date were as follows:
Carrying Amount Fair Value

Cash in bank P 25,000 P 25,000
Accounts Receivable 425,000 300,000
Inventory 1,300,000 875,000
Equipment (net) 2,500,000 2,750,000
Goodwill 250,000 50,000
Total Assets P4,500,000 P4,000,000
Payables P1,000,000 P1,000,000
How much is the goodwill (gain on bargain purchase)?

A. 278,500
B. 140,000
C. 264,500
D. 287,500
15. On September 4, 2022, Cantavieja Corporation paid P560,000 in acquiring 4,000

shares of Laurel Company. At the same date, the 1,000 shares of Laurel Company
had a market price of P140 per share.
Cantavieja Corporation and Laurel Company presents its condensed financial

statements as of September 4, 2022 below:
Cantavieja Corporation Laurel Company

Assets P3,800,000 P850,000
Liabilities 1,350,000 250,000
Ordinary Shares, P100 par 1,500,000 500,000
Total P3,800,000 P850,000

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On September 4, 2022, Cantavieja Corporation paid P560,000 in acquiring 4,000

shares of Laurel Company. At the same date, the 1,000 shares of Laurel Company
had a market price of P140 per share.
In the consolidated statement of financial position on September 4, 2022, the total

assets and total equity must be:
A. Total Assets - P4,170,000, Total Liabilities - P2,550,000
B. Total Assets - P4,650,000, Total Liabilities - P3,190,000
C. Total Assets - P4,750,000, Total Liabilities - P3,050,000
D. Total Assets - P4,190,000, Total Liabilities - P2,590,000
16. On January 1, 2018, Tender Corporation acquired 100% of Juicy Co. On that date,
both Tender Corporation and Juicy Company’s equipment has a 10-year remaining
useful life. Tender Corp. uses the equity method to record its investment in Juicy Co.
Tender Corporation Juicy Company

Book Value Fair Value Book Value Fair Value
January 1, 2018 P320,000 P420,000 P272,000 P400,000
December 31, 2020 394,000 545,200 190,400 357,000
What is the consolidated balance for the Equipment account as of December 31, 2020?
A. P674,000
B. P712,400
C. P612,400
D. P546,000
17. On January 1, 2019, Lucario Company purchased 80% of the common stock of Blue
Company for P320,000. On this date, Blue Company had common stock, other paid-
in capital, and retained earnings of P40,000, P120,000, and P200,000, respectively.
Lucario Company’s common stock amounted to P500,000 and retained earnings of
P200,000. On the same date, the only tangible assets of Blue that were undervalued
were inventory and building. Inventory, for which FIFO is used, was worth P5,000
more than cost. The inventory was sold in 2019. Building, which was worth P15,000
more than book value, has a remaining life of 8 years, and straight-line depreciation
is used. Any remaining excess is full-goodwill with an impairment for 2019 amounting
to P3,000.
Blue Company reported net income of P50,000 and paid dividends of P10,000 in 2019,
while Lucario Company reported net income amounted to P100,000 and paid
dividends of P20,000.
How much is the consolidated net income, attributable to Lucario Company?
A. P20,000
B. P124,100
C. P8,025
D. P132,125

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18. Using the information in No. 17, how much is the consolidated net income,
attributable to the Non-Controlling Interest?
A. P20,000
B. P124,100
C. P8,025
D. P132,125
19. Using the information in No. 17, how much is the consolidated Retained Earnings on
December 31, 2019?
A. P304,100
B. P305,000
C. P344,100
D. P320,000
20. Using the information in No. 17, how much is the ending balance of the Non-
Controlling Interest on December 31, 2019?
A. P85,025
B. P88,025
C. P87,025
D. P86,025

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ANSWER KEY:
THEORIES
1. C. S1 - False; S2 – True
2. B. Joint venture
3. C. The business only has equity financing and has no debt financing.
4. D. Each of the above is recorded at fair value.
5. D. The boards of directors of both Enchanted and Delicate must approve the merger.
6. C. Consolidated financial statements
7. D. Holds protective rights as an investor.
8. B. The subsidiary should not be consolidated but IFRS 5 should be used.
9. A. It has existing rights that give it the current ability to direct the relevant activities.
10. B. More than half of voting power of an entity.
11. C. II, III, IV
12. A. the cost method
13. A. expensed as incurred
14. D. equal to the parent's stockholders' equity.
15. B. Consolidated statements of highly diversified companies cannot be compared with
industry standards.
16. B. Investment in Subsidiary
17. C. Parent’s revenues less expenses for its own operations plus the equity from subsidiary’s
income recorded by parent.
18. C. Dr. Investment in Subsidiary, Cr. Retained Earnings
19. A. Dr. Retained Earnings, Cr. Investment in Subsidiary
20. B. The investment account remains at initial value.
PROBLEMS
1. D. P335,000
Patent -
Customer List P 80,000.00
Operating Lease 25,000.00
R&D 150,000.00
Goodwill -
Franchise 80,000.00
Right of use machinery -
Total P335,000.00
2. B. P1,276,00

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Consideration transferred:
Cash P 500,000
Issued shares of stock 3,000,000
Contingency Fee 150,000 P3,650,000
Less: Fair value of net identifiable
assets acquired:
Cash P 300,000
Accounts Receivable 980,000
Inventory 600,000
PPE, net 1,064,000
Liabilities (570,000) 2,374,000
Goodwill P1,276,000
3. C. P1,326,000
Consideration transferred:
Cash P 500,000
Issued shares of stock 3,000,000
Contingency Fee 150,000
Direct Cost 50,000 P3,700,000
Less: Fair value of net identifiable assets
acquired:
Cash P 300,000
Accounts Receivable 980,000
Inventory 600,000
PPE, net 1,064,000
Liabilities (570,000) 2,374,000
Goodwill P1,326,000
4. D. P5,573,376
Cash (down payment): P4,800,000 x 20% P 960,000

Balance: PV of an annuity of P1 for 2 periods
[0.8264 x (P4,800,000 x 80%)] 3,173,376
Land (fair value) 1,440,000
Consideration transferred P5,573,376
5. D. P2,201,376

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6. A. P55,000
Enrile Company Acquisition date Consolidation date Net change

Share capital P100,000 P100,000
Subsidiary’s net assets at fair value P180,000 P380,000 P200,000
Goodwill attributable to NCI - acquisition date P10,000

NCI’s proportionate share in net assets of subsidiary (P180,000 x 25%) 45,000
Fair value of NCI P55,000
7. D. P17,000
Consideration transferred P150,000

Less: Parent’s proportionate share in the net assets of subsidiary (135,000)
(P180,000 x 75%)
Goodwill attributable to owners of parent - acquisition date P15,000
Less: Parent’s share in goodwill impairment (P8,000 x 75%) (6,000)
Goodwill attributable to owners of parent - current year P9,000
Fair value of NCI P55,000

Less: NCI’s proportionate share in the net assets of subsidiary (P180,000 x 25%) (45,000)
Goodwill attributable to NCI - acquisition date P10,000
Less: NCI’s share in goodwill impairment (P8,000 x 25%) (2,000)
Goodwill attributable to NCI - current year P8,000
Goodwill attributable to owners of parent - current year P9,000

Goodwill attributable to NCI - current year 8,000
Goodwill, net - current year P17,000
8. B. P103,000
Del Valle’s net assets at FV - current year P380,000

Multiply by: NCI percentage 25%
Total P95,000
Add: Goodwill attributable to NCI - current year 8,000
Non-controlling interest in net assets - current year P103,000
9. C. P644,000
Del Valle’s retained earnings - current year P500,000

Consolidation adjustments
Del Valle’s share in the net change in Enrile’s net assets P150,000
Del Valle’s share in goodwill impairment (6,000) P144,000
Consolidated earnings - current year P644,000

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10. C. P1,367,000
Total Assets of Del Valle P1,000,000

Total Assets of Enrile 500,000
Investment in subsidiary (consideration transferred) (150,000)
Goodwill – net 17,000
Consolidated total assets P1,367,000
11. B. P1,990,000
Fair Value of net assets acquired P21,900,000

Total liabilities at book value of Alexa Company (2,000,000)
Total 19,900,000
Multiply 10%
NCI P1,990,000
12. C. P2,090,000
Consideration transferred (P16m + 4m) P20,000,000

NCI [(P21.9m-2m) x 10%] 1,990,000
Total P21,990,000
FVNAA (P21.9m - 2m) (19,900,000)
Goodwill P2,090,000
13. C. P12,735,000
Shares issued (300,000 shares x 20) P6,000,000

Equity, Ferreira Company 6,800,000
Less: Finder’s Fee (30,000)
Less: Share issuance costs (35,000)
Total consolidated equity P12,735,000
14. D. P287,500
Cash paid P2,500,000

NCI (at proportionate share) 737,500
Total P3,237,500
Less: FVNA (2,950,000
Goodwill (gain on bargain purchase) P287,500
15. D. Total Assets - P4,190,000, Total Liabilities - P2,590,000

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Cantavieja Co. Assets P3,800,000

Laurel Co. Assets 850,000
Goodwill
Cash paid P560,000
NCI 140,000
FVNA (600,000) 100,000
Less: Cash paid (560,000)
Total Assets P4,190,000
Ordinary Shares, Cantavieja Co. P1,500,000

Retained Earnings, Cantavieja Co. 950,000
NCI 140,000
Total Equity P2,590,000
16. A. P674,000
Tender Corp. Book Value P394,000
Juicy Co. Book Value 190,400
Original Acquisition Date – allocation to Juicy Co.’s
Equipment (400000 – 272000) 128,000
Less: Amortization (128000 * 3/10) 38,400
Consolidated balance of Equipment, 12/31/20 P674,000
17. B. P124,100
Consideration Transferred (80%) P320,000
NCI at FV (320000/80% * 20%) 80,000
Less: FV of Net Assets Acquired
Common Stock 40,000
APIC 120,000
Retained Earnings 200,000
Inventory adj. 5,000
Building adj. 15,000 380,000
Goodwill P20,000
Consolidated Net Income Lucario Co. Blue Co.

Net Income P100,000 P50,000
Inventory (5,000)
Building (15000/8 yrs) (1,875)
Impairment – Full Goodwill (3,000)
Dividends (10000 * 80%) (8,000) -
P92,000 P40,125
CNI, attributable to Lucario Co.

From CNI, Lucario Co. P92,000
From CNI, Blue Co. (40,125 * 80%) 32,100
CNI, attributable to Lucario Co. P124,100

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18. C. P8,025
CNI, attributable to the Non-Controlling Interest
From CNI, Blue Co. P40,125
Multiply: NCI % 20%
CNI, attributable to the Non-Controlling Interest P8,025
19. A. P304,100
Retained Earnings, beginning P200,000
CNI – Lucario Company 124,100
Less: Dividends 20,000
Consolidated Retained Earnings, 12/31/19 P304,100
20. D. P86,025
NCI at FV, beginning (320000/80% * 20%) P80,000
NCI – NI 8,025
Less: NCI Dividends (10000* 20%) 2,000
NCI on 12/31/19 P86,025
** Nothing Follows **
Review well. Good luck sa real, CAFwa!
Reference:
Various CPA Review Materials.
Checked and Verified:

ABC Professor.
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Acco 30023 Accounting For Business Combinations Midterm Reviewer

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Acco 30023 Accounting For Business Combinations Midterm Reviewer

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ACCO 30023 Accounting for Business Combinations Midterm

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

THEORIES: Select the best answer for each of the following.

2. Which of the following is not a business combination?

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

8. An entity acquired an investment in a subsidiary with the view to dispose of the

9. An investor has a power over the investee when:

11. Which of the statements is true?

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

12. A majority-owned subsidiary that is in legal reorganization should normally be

A. consolidated financial statements.

13. In a business combination accounted for as an acquisition, registration costs related

14. On the consolidated balance sheet, consolidated stockholders' equity is:

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

PROBLEMS: Select the best answer for each of the following.

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Del Valle Company Enrile Company

Total Liabilities and equity P 1,000,000 P 500,000

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Siri Company Alexa Company

Compute for the NCI.

A. P1,880,000 B. P1,990,000 C. P1,050,000 D. P1,060,000

Ferreira Company Lorenzo Company

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

14. On January 1, 2021, Yuchengco Company acquired 75% interest in Arellano

Carrying Amount Fair Value

Payables P1,000,000 P1,000,000

How much is the goodwill (gain on bargain purchase)?

15. On September 4, 2022, Cantavieja Corporation paid P560,000 in acquiring 4,000

Cantavieja Corporation and Laurel Company presents its condensed financial

Cantavieja Corporation Laurel Company

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

On September 4, 2022, Cantavieja Corporation paid P560,000 in acquiring 4,000

In the consolidated statement of financial position on September 4, 2022, the total

Tender Corporation Juicy Company

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Cash (down payment): P4,800,000 x 20% P 960,000

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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Enrile Company Acquisition date Consolidation date Net change

Goodwill attributable to NCI - acquisition date P10,000

Consideration transferred P150,000

Fair value of NCI P55,000

Goodwill attributable to owners of parent - current year P9,000

Del Valle’s net assets at FV - current year P380,000

Del Valle’s retained earnings - current year P500,000

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