(With control premium)

1. The financial position of S Corp. on December 1, 2020 is presented below:

Current assets 195,000 Liabilities 525,000

Land 1,320,000 Ordinary shares, 900,000
P5 par
Building 660,000 Share premium 825,000
Equipment 525,000 Retained earnings 450,000

Total Assets 2,700,000 Total 2,700,000

The land have a fair value of P2,100,000 and the fair value of the building increased by P480,000. P Corp. acquired 80% of S’s
outstanding shares for P3,000,000. The non-controlling interest is measured at fair value.

SCENARIO 1: The consideration paid includes control premium of P852,000.

1. At what amount should the NCI be initially measured on December 1, 2020?
2. How much is the goodwill or (gain on acquisition) to be recognized on the consolidated financial statements on
December 1, 2020?

SCENARIO 2: The consideration paid excludes control premium of P138,000 and the fair value of the non-controlling interest is
P736,500.
1. At what amount should the NCI be initially measured on December 1, 2020?
2. How much is the goodwill to be recognized on the consolidated financial statements on December 1, 2020?

SCENARIO 3: The consideration paid includes control premium of P222,000.

1. At what amount should the NCI be initially measured on December 1, 2020?
2. How much is the goodwill to be recognized on the consolidated financial statements on December 1, 2020?

(Previously-Held Securities)
2. P Company acquires 25% of S Corporation’s ordinary shares for P190,000 cash and carries the investment using the cost method.
After three months, P Company purchases another 60% of S Corporation’s ordinary shares for P540,000. On this date, S Corporation
reports identifiable net assets with carrying value of P720,000 and fair value of P920,000. The liabilities of S Corporation has a book
value and fair value of P280,000. The fair value of the non-controlling interest is P125,000.

1. How much is the total ownership interest of P Co. over S Corporation at date of acquiring control?
2. How much is the minority interest in S Corporation?
3. At what amount should the previously held securities be valued at date of acquisition of control?
4. At what amount should the NCI be initially measured?
5. How much is the result of business combination?

(Consolidation)
3. The January 1, 2020 statement of financial position of P Co. and S Corp. at book and fair values are as follows:
P Co.
Book value Fair value
Current assets P550,000 P575,000
Property and equipment (net) 205,000 240,000

Current liabilities P300,000 P300,000

Ordinary shares, P10 par 240,000
Retained earnings 215,000

S Corp.
Book value Fair value
Current assets P400,000 P375,000
Property and equipment (net) 450,000 500,000

Current liabilities P150,000 P150,000

Long-term liabilities 250,000 230,000
Ordinary shares, P1 par 50,000
Share premium 100,000
Retained earnings 300,000

P Co. paid P475,000 in cash for 80% of S Corp.’s ordinary shares. P Co. also paid P40,000 of professional fees to effect the combination.
The fair value of the NCI is assessed to be P115,000.

Required:
1. Determine the result of acquisition.
2. Prepare a schedule showing the allocation of the result of acquisition to the controlling and non-controlling interest.
3. Prepare the journal entry to record the acquisition.
4. Prepare the working paper elimination entries.
5. Compute for the consolidated total assets on January 1, 2020.
6. Compute for the consolidated total liabilities on January 1, 2020.
7. Compute for the consolidated total shareholders’ equity on January 1, 2020.
8. Prepare the consolidated statement of financial position as of January 1, 2020.