Accounting For Business Combinations Pre 7 - Midterm Quizzes
Accounting For Business Combinations Pre 7 - Midterm Quizzes
Accounting For Business Combinations Pre 7 - Midterm Quizzes
1. Glove will issue shares of P5 par value common Total FV P (75%) NCI (25%)
stock for the net assets of Combo Company. FV of the
970,000 750,000 **220,000
subsidiary
Glove’s common stock has a current market
FV of NA 800,000 600,000 200,000
value of P20 per share. The fair value of the net Goodwill
*170,000 150,000 20,000
assets of Combo is P800,000. How many shares (Gain)
shall be issued to have an income from
acquisition of P100,000? 4. On January 1, 2018, Box Corp. purchased
35,000 shares Mega’s net assets with fair value of P390,00 by
issuing 100,000 shares, P1 par value stock, with
*Consideration paid: 700,000 fair value of P4.65. It was further agreed that
FV of Identifiable net assets: (800,000) Box will pay an additional amount on January 1,
Gain from acquisition: 100,000 2020 if the average income during the next two
years will exceed P60,000 per year. The
*700,000/20 = 35,000 shares expected value of this consideration is at
P138,000. On September 2018, within the
2. Brown Corporation paid P120,000 to acquire measurement period, the contingent
the net assets of Perk Company. Perk reported consideration was revalued at P127,500 based
assets with a book value of P90,000 and fair on additional information. Determine the
value of P147,000 and liabilities with book value goodwill to be recognized on January 1, 2018
and fair value of P34,500 on the date of and value of goodwill as of September 2018.
combination. Brown paid P4,500 for *Goodwill, January 1, 2018 – P213,000
professional fees related to the acquisition.
What amount will be recorded as goodwill by **Goodwill, September 2018 – P202,500
Brown?
P7,500 Consideration transferred: 465,000
Contingent: 138,000
Consideration paid: 120,000 FV of net assets: (390,000)
*FV of Identifiable net assets: (112,500) *Goodwill, 01/01/2018: 213,000
Goodwill: 7,500 Revaluation: (10,500)
**Goodwill, 09/2018 202,500
*147,000 – 34,500 = 112,500
5. Determine the amount to be recorded for
3. Kopi Company acquires 75% of Pearl Company Additional paid-in capital and expenses based
for P750,000. The company implied fair value is on the following acquisition-related costs:
P970,000. If the fair value of Pearl’s net assets
on the date of acquisition is P800,000 with
Accountant’s professional fee 100,000
carrying value of P600,000, determine the
General administrative costs 30,000
amount of goodwill (gain) arising from
Audit fee for stock issue 92,000
consolidation and amount of non-controlling SEC registration for stock issue 10,000
interest arising from consolidation. Other acquisition costs 12,000
*Amount of goodwill (gain) arising from
consolidation – P170,000 Additional paid-in capital – 102,000
7.