1. Prince Charming Corporation acquired all the assets and assume all liabilities of Princess Corporation.

The
information below summarizes the financial position of Princess Corp and Prince Charming Corp

Princess Prince Charming

Carrying Amount Fair Value Carrying Amount Fair Value
Cash 2,500,000 10,000,000
Inventory 2,800,000 2,500,000 4,000,000 3,800,000
Equipment 3,000,000 2,900,000 5,000,000 4,000,000
Building 4,300,000 4,000,000 3,000,000 2,600,000
Land 5,000,000 6,000,000 10,000,000 12,000,000
Goodwill 1,000,000 500,000
Patent 500,000 600,000 300,000 500,000
Accounts payable 2,300,000 2,300,000 2,800,000 2,800,000
Bonds Payable 3,100,000 3,500,000 1,000,000 1,200,000
Shareholder’s Equity 13,700,000 29,000,000

The purchase price is composed of Cash 8,000,000, Ordinary Shares with a fair value of 2,800,000, and a 3-year
Bonds Payable with a face amount of 5,000,000. The bonds payable was discounted to earn 12% annual interest.
Prince Charming incurred the following cost in completing the acquisition:
Cost of issuing bonds 50,000
Legal fees 100,000
Finder’s fees 50,000
Professional Fees 100,000
Cost of issuing shares 80,000
a. Compute for the Fair Value of the Net Assets Acquired (FVNA).
b. Compute for the total Consideration Transferred.
c. Compute for the goodwill/gain on bargain purchase on the said transaction.
d. Determine the amount of assets and liabilities after the business combination.

2. On January 1, 2023, P Corp. acquired 70% ordinary shares of S Corp. the Fair Value of the Net Assets acquired is
500,000. Compute for the Goodwill/Gain on Bargain Purchase under the following cases:

a. The consideration transferred is 400,000 cash. The fair value of the Non-controlling interest is 200,000.
b. The consideration transferred is 400,000 cash. The NCI is measured using the implied Fair Value method.
c. The consideration transferred is 400,000 cash. The NCI is measured using the proportionate share in FVNA.
d. The consideration transferred is 200,000 and the Fair value of the NCI is 130,000.
e. The consideration transferred is 200,000 and the NCI is measured using the implied Fair Value method.
f. The consideration transferred is 300,000 cash plus a control premium of 100,000. The NCI is measured using the
implied FV method.

3. On January 1, 2023 Daddy Shark acquired Mommy Shark Corp’s 40% ordinary shares for 600,000 which is the fair
value at that time. The investment does not result to control hence, the investment is classified as investment
through FVPL. On June 30,2023, Daddy Shark acquired an additional 30% interest in Mommy Shark for 500,000 the
fair value at that time. The Fair Value of the net assets acquired is 1,000,000 while the NCI is measured at Fair Value
for 400,000. Cost incurred related to business combination is 30,000.
a. Compute the goodwill/gain from business combination.
b. Compute for the net amount to be recognized in profit or loss.

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