PROBLEM A

Blake Corporation acquired 65 percent of Slate Corporation's common stock on December 31, 2012.
Slate's statement of financial position immediately before the combination reflected the following
balances:

A review of the fair value of Slate's assets and liabilities indicated that inventory, land, and buildings
and equipment had fair values of P195,000, P300,000, and P900,000 respectively. All other assets
and liabilities have book value equal to their fair value.

1. Assuming Blake paid P800,000 for 65% of the outstanding shares of Slate and the fair value of
the noncontrolling interest at the date of acquisition was determined to be
P400,000, how much is the goodwill/(income from acquisition) to be reported in the
consolidated statement of financial position of Blake Corporation?

2. Assuming the Blake paid P600,000 for 65% of the outstanding shares of Slate and fair value of
the noncontrolling interest at the date of acquisition was determined to be P320,000, how
much is the goodwill/(income from acquisition) to be reported in the consolidated statement of
financial position of Blake Corporation?

3. Assuming Blake paid P715,000 for 65% of the outstanding shares of Slate, how much is the
goodwill/(income from acquisition) to be reported in the consolidated statement of financial
position of Blake Corporation?

4. Assuming Blake paid P650,000 for 65% of the oufstanding shares of Slate, how much is the
goodwill/(income from acquisition) to be reported in the consolidated statement of financial
position of Blake Corporation?
 PROBLEM B
Brown Company has gained control over the operations of Caldwell corporation by acquiring 85% of
its outstanding capital stock for P2,580,000. This amount includes a control premium of P30,000.
Acquisition expenses paid, direct and indirect, amounted to P83,000 and 42.000 respectively. Book
values as of the balance sheet date are shown below:

300,000
436,000

1,350,000
665,000
171,000

The following was ascertained on the date of acquisition:

o The value of receivables and equipment has decreased by P25,000 and P14,000 respectively.
o The fair value of inventories is now P436,000 whereas the value of land and building has
increased by P471,000 and P107.000 respectively.
1,018,000
o There was an unrecorded accounts payable amounting to P27,000 and the carrying value of
notes is P738,000.
o All identifiable assets not mentioned above are worthless. Y unh

Compute for the following balances to be presented in the consolidated statement of financial position
at the date of business combination:
1. Inventories.
2. Goodwill.
3. Total assets.
4. Total liabilities.
5. Total shareholder's equity.
6. Non controlling interest.