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    The document presents financial information for P Company and S Company prior to their business combination on January 2, 2023. It includes assets, liabilities and equity amounts for each company. The document then provides assumptions and calculations to prepare consolidated financial statements for the combined entity, including determining the amount of goodwill under different methods.

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    The document presents financial information for P Company and S Company prior to their business combination on January 2, 2023. It includes assets, liabilities and equity amounts for each company. The document then provides assumptions and calculations to prepare consolidated financial statements for the combined entity, including determining the amount of goodwill under different methods.

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    6 views15 pages

    01 Control Premium and Step

    Uploaded by

    ANGELI GRACE GALVAN
    The document presents financial information for P Company and S Company prior to their business combination on January 2, 2023. It includes assets, liabilities and equity amounts for each company. The document then provides assumptions and calculations to prepare consolidated financial statements for the combined entity, including determining the amount of goodwill under different methods.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 15

    The following information is presented to you by P Company and S Company

    before business combination on January 2, 2023.

    (in pesos)
    P Company S Company
    Book Value
    Cash 800,000.00 50,000.00
    Accounts Receivable 200,000.00 100,000.00
    Inventories 200,000.00 80,000.00
    Land 100,000.00 50,000.00
    Building-net 600,000.00 400,000.00
    Equipment-net 800,000.00 200,000.00
    Investment in S Co.
    Totals 2,700,000.00 880,000.00

    Accounts payable 150,000.00 60,000.00


    Bonds Payable, 8% (P300,000 Face) 290,000.00
    Ordinary shares - P Co. 1,200,000.00
    Ordinary shares - S Co. 100,000.00
    Share Premium - P Co. 300,000.00
    Share Premium - S Co. 200,000.00
    Retained earnings- P Co. 1,050,000.00
    Retained earnings- S Co. 230,000.00
    Totals 2,700,000.00 880,000.00

    Prepare Consolidated Financial Statements at the date of acquisition


    based on the following assumptions:
    S Company
    Fair Value
    50,000.00
    100,000.00
    100,000.00
    60,000.00
    450,000.00
    140,000.00

    900,000.00

    60,000.00
    240,000.00

    300,000.00
    WITH CONTROL PREMIUM

    1. FULL GOODWILL NCI P135,000 Given


    Consideration transferred 550,000.00
    Control premium 40,000.00
    NCI 135,000.00
    Total 725,000.00 OS
    Less: BVNAA SP
    OS 100,000.00 RE
    SP 200,000.00 Inventories
    RE 230,000.00 530,000.00 Land
    Excess of Cost over BV 195,000.00 Building-net
    Less: Alloc of FV Bonds Payable
    Inventories 20,000.00 Goodwill
    Land 10,000.00 Equipment-net
    Building-net 50,000.00 Investment in S Co.
    Equipment-net (60,000.00) NCI
    Bonds Payable 50,000.00 70,000.00
    Full Goodwill under gross up 125,000.00

    2. FULL GOODWILL NCI Gross up


    Consideration transferred 550,000.00
    Control premium 40,000.00
    NCI 137,500.00
    Total 727,500.00 OS
    Less: BVNAA SP
    OS 100,000.00 RE
    SP 200,000.00 Inventories
    RE 230,000.00 530,000.00 Land
    Excess of Cost over BV 197,500.00 Building-net
    Less: Alloc of FV Bonds Payable
    Inventories 20,000.00 Goodwill
    Land 10,000.00 Equipment-net
    Building-net 50,000.00 Investment in S Co.
    Equipment-net (60,000.00) NCI
    Bonds Payable 50,000.00 70,000.00
    Full Goodwill under gross up 127,500.00
    3. PARTIAL GOODWILL OR PROPORTIONATE SHARE
    Consideration transferred 550,000.00
    Control premium 40,000.00
    NCI 120,000.00
    Total 710,000.00 OS
    Less: BVNAA SP
    OS 100,000.00 RE
    SP 200,000.00 Inventories
    RE 230,000.00 530,000.00 Land
    Excess of Cost over BV 180,000.00 Building-net
    Less: Alloc of FV Bonds Payable
    Inventories 20,000.00 Goodwill
    Land 10,000.00 Equipment-net
    Building-net 50,000.00 Investment in S Co.
    Equipment-net (60,000.00) NCI
    Bonds Payable 50,000.00 70,000.00
    Goodwill / BPG 110,000.00
    c Acqui Price 460,000.00 OS
    Less: BVNAA 0.80 SP
    OS 100,000 80,000.00 RE
    SP 200,000 160,000.00 Investment in S Co.
    RE 230,000 184,000.00 424,000.00 NCI
    Excess of Cost over BV 36,000.00
    Less: Alloc of FV 0.80
    Inventories 20,000 16,000.00 Inventories
    Land 10,000 8,000.00 Land
    Building-net 50,000 40,000.00 Building-net
    Equipment-ne -60,000 -48,000.00 Bonds Payabl
    Bonds Payabl 50,000 40,000.00 56,000.00 Equipment-net
    Goodwill / BPG -20,000.00 Investment in S Co.

    Investment in S Co.
    Retained earnings
    1 OS 100,000.00
    100,000.00 SP 200,000.00
    200,000.00 RE 230,000.00
    230,000.00 Investment in S Co.
    20,000.00 NCI
    10,000.00
    50,000.00 2 Inventories 20,000.00
    50,000.00 Land 10,000.00
    85,000.00 Building-net 50,000.00
    Equipment-net 60,000.00 Bonds Payable 50,000.00
    Investment in S Co. 550,000.00 Equipment-net
    135,000.00 Investment in S Co.
    745,000.00 745,000.00 NCI

    3 Goodwill 125,000.00
    Investment in S Co.
    NCI

    1 OS 100,000.00
    100,000.00 SP 200,000.00
    200,000.00 RE 230,000.00
    230,000.00 Investment in S Co.
    20,000.00 NCI
    10,000.00
    50,000.00 2 Inventories 20,000.00
    50,000.00 Land 10,000.00
    87,500.00 Building-net 50,000.00
    Equipment-net 60,000.00 Bonds Payable 50,000.00
    Investment in S Co. 550,000.00 Equipment-net
    137,500.00 Investment in S Co.
    747,500.00 747,500.00 NCI
    3 Goodwill 127,500.00
    Investment in S Co.
    NCI

    1 OS 100,000.00
    100,000.00 SP 200,000.00
    200,000.00 RE 230,000.00
    230,000.00 Investment in S Co.
    20,000.00 NCI
    10,000.00
    50,000.00 2 Inventories 20,000.00
    50,000.00 Land 10,000.00
    70,000.00 Building-net 50,000.00
    Equipment-net 60,000.00 Bonds Payable 50,000.00
    Investment in S Co. 550,000.00 Equipment-net
    120,000.00 Investment in S Co.
    730,000.00 730,000.00 NCI

    3 Goodwill 110,000.00
    Investment in S Co.
    100,000.00
    200,000.00
    230,000.00
    Investment in S Co. 424,000.00
    106,000.00

    16,000.00
    8,000.00
    40,000.00
    40,000.00
    Equipment-net 48,000.00
    Investment in S Co. 56,000.00

    20,000.00
    Retained earnings 20,000.00
    424,000.00
    106,000.00

    60,000.00
    56,000.00
    14,000.00

    110,000.00
    15,000.00

    424,000.00
    106,000.00

    60,000.00
    56,000.00
    14,000.00
    110,000.00
    17,500.00

    424,000.00
    106,000.00

    60,000.00
    56,000.00
    14,000.00

    110,000.00
    Consideration transferred P550,000 plus P40,000 control premium

    1. FULL GOODWILL NCI P135,000 Given Elimination Entries


    (in pesos) Dr
    P Company S Company
    Cash 210,000.00 50,000.00
    Accounts Receivable 200,000.00 100,000.00
    Inventories 200,000.00 80,000.00 2 20,000.00
    Land 100,000.00 50,000.00 2 10,000.00
    Building-net 600,000.00 400,000.00 2 50,000.00
    Equipment-net 800,000.00 200,000.00
    Investment in S Co. 590,000.00

    Goodwill 3 125,000.00
    Totals 2,700,000.00 880,000.00

    Accounts payable 150,000.00 60,000.00


    Bonds Payable, 8% (P300,000 Face) 290,000.00 2 50,000.00
    Ordinary shares - P Co. 1,200,000.00
    Ordinary shares - S Co. 100,000.00 1 100,000.00
    Share Premium - P Co. 300,000.00
    Share Premium - S Co. 200,000.00 1 200,000.00
    Retained earnings- P Co. 1,050,000.00
    Retained earnings- S Co. 230,000.00 1 230,000.00
    Non-controlling Interest

    Totals 2,700,000.00 880,000.00 785,000.00

    2. FULL GOODWILL NCI Gross up Elimination Entries


    (in pesos) Dr
    P Company S Company
    Cash 210,000.00 50,000.00
    Accounts Receivable 200,000.00 100,000.00
    Inventories 200,000.00 80,000.00 2 20,000.00
    Land 100,000.00 50,000.00 2 10,000.00
    Building-net 600,000.00 400,000.00 2 50,000.00
    Equipment-net 800,000.00 200,000.00
    Investment in S Co. 590,000.00

    Goodwill 3 127,500.00
    Totals 2,700,000.00 880,000.00

    Accounts payable 150,000.00 60,000.00


    Bonds Payable, 8% (P300,000 Face) 290,000.00 2 50,000.00
    Ordinary shares - P Co. 1,200,000.00
    Ordinary shares - S Co. 100,000.00 1 100,000.00
    Share Premium - P Co. 300,000.00
    Share Premium - S Co. 200,000.00 1 200,000.00
    Retained earnings- P Co. 1,050,000.00
    Retained earnings- S Co. 230,000.00 1 230,000.00
    Non-controlling Interest

    Totals 2,700,000.00 880,000.00 787,500.00

    3. PARTIAL GOODWILL OR PROPORTIONATE SHARE Elimination Entries


    (in pesos) Dr
    P Company S Company
    Cash 210,000.00 50,000.00
    Accounts Receivable 200,000.00 100,000.00
    Inventories 200,000.00 80,000.00 2 20,000.00
    Land 100,000.00 50,000.00 2 10,000.00
    Building-net 600,000.00 400,000.00 2 50,000.00
    Equipment-net 800,000.00 200,000.00
    Investment in S Co. 590,000.00

    Goodwill 3 110,000.00
    Totals 2,700,000.00 880,000.00

    Accounts payable 150,000.00 60,000.00


    Bonds Payable, 8% (P300,000 Face) 290,000.00 2 50,000.00
    Ordinary shares - P Co. 1,200,000.00
    Ordinary shares - S Co. 100,000.00 1 100,000.00
    Share Premium - P Co. 300,000.00
    Share Premium - S Co. 200,000.00 1 200,000.00
    Retained earnings- P Co. 1,050,000.00
    Retained earnings- S Co. 230,000.00 1 230,000.00
    Non-controlling Interest

    Totals 2,700,000.00 880,000.00 770,000.00


    The following information is presented to you by P Company and S Company
    before business combination on January 2, 2023.

    (in pesos)
    P Company S Company
    Book Value
    Cash 750,000.00 50,000.00
    Accounts Receivable 200,000.00 100,000.00
    Inventories 200,000.00 80,000.00
    Land 100,000.00 50,000.00
    Building-net 600,000.00 400,000.00
    Equipment-net 800,000.00 200,000.00
    Investment FV-OCI (S Co. 10%) 50,000.00
    Totals 2,700,000.00 880,000.00

    Accounts payable 150,000.00 60,000.00


    Bonds Payable, 8% (P300,000 Face) 290,000.00
    Ordinary shares - P Co. 1,200,000.00
    Ordinary shares - S Co. 100,000.00
    Share Premium - P Co. 300,000.00
    Share Premium - S Co. 200,000.00
    Retained earnings- P Co. 1,050,000.00
    Retained earnings- S Co. 230,000.00
    Totals 2,700,000.00 880,000.00

    Prepare Consolidated Financial Statements at the date of acquisition


    based on the following assumptions:

    Step Acquisition GIVEN:

    a. P455,000 for 70% FV of NCI 135,000.00

    Re-measurement of 10% initial investment


    455,000 / 70% x 10%
    Less: Carrying value
    S Company
    Fair Value
    50,000.00
    100,000.00
    100,000.00
    60,000.00
    450,000.00
    140,000.00

    900,000.00

    60,000.00
    240,000.00

    300,000.00

    Proportionate
    share basis
    (PSB); P600,000
    x 20%

    120,000.00

    initial investment
    65,000.00
    50,000.00
    Step acquisition

    1. FULL GOODWILL NCI P135,000 Given Elimination Entries


    (in pesos) Dr
    P Company S Company
    Cash 295,000.00 50,000.00
    Accounts Receivable 200,000.00 100,000.00
    Inventories 200,000.00 80,000.00 2 20,000.00
    Land 100,000.00 50,000.00 2 10,000.00
    Building-net 600,000.00 400,000.00 2 50,000.00
    Equipment-net 800,000.00 200,000.00
    Investment in S Co. 520,000.00

    Goodwill 3 55,000.00
    Totals 2,715,000.00 880,000.00

    Accounts payable 150,000.00 60,000.00


    Bonds Payable, 8% (P300,000 Face) 290,000.00 2 50,000.00
    Ordinary shares - P Co. 1,200,000.00
    Ordinary shares - S Co. 100,000.00 1 100,000.00
    Share Premium - P Co. 300,000.00
    Share Premium - S Co. 200,000.00 1 200,000.00
    Retained earnings- P Co. 1,065,000.00
    Retained earnings- S Co. 230,000.00 1 230,000.00
    Non-controlling Interest

    Totals 2,715,000.00 880,000.00 715,000.00

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