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Practice Problem 2 - Stocks Acquisiton

PIPA and SISA are combining their companies. The document provides financial information for each company prior to the combination and presents 4 practice problems related to accounting for the business combination. The problems ask the reader to calculate values such as the price paid for SISA's stock, the goodwill or gain from acquisition, the consolidated stockholders' equity on the date of acquisition, and the total consolidated assets on the date of acquisition based on different acquisition scenarios.

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Shine Valdez
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148 views1 page

Practice Problem 2 - Stocks Acquisiton

PIPA and SISA are combining their companies. The document provides financial information for each company prior to the combination and presents 4 practice problems related to accounting for the business combination. The problems ask the reader to calculate values such as the price paid for SISA's stock, the goodwill or gain from acquisition, the consolidated stockholders' equity on the date of acquisition, and the total consolidated assets on the date of acquisition based on different acquisition scenarios.

Uploaded by

Shine Valdez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Practice Problem 2 - Stocks Acquisition

On January 2, 2014, the Statement of Financial Position of PIPA and SISA Company prior to the combination are:
PIPA Company SISA Company
Cash P225,000 7,500
Inventories 150,000 15,000
Property and equipment (net) 375,000 52,500 FV of assets
Total Assets P750,000 P75,000 99,000

Current Liabilities P45,000 7,500 7,500


Common Stock, P100 par 75,000 7,500
Additional Paid in Capital 225,000 15,000
Retained Earnings 405,000 45,000
Total Liabilities and SHE P750,000 P75,000

The fair value of SISA Company’s equipment is P 76,500

Assume the following independent cases:


1. Assuming PIPA Company acquired all of the outstanding stock of SISA Company resulting to a goodwill of P33,000,
contingent consideration is P18,000,
how much is the price paid to SISA Company’s stock?
a. P124,500 Agg 1
b. P157,500 Cash 106,500 squeezed
c. P106,500 CC 18,000
d. P142,500 Agg 2
FVNA 91,500
GW 33,000

2. Assuming PIPA Company acquired 70% of the outstanding common stock of SISA Company for P52,500
and NCI is measured at fair value of P30,500, how much is the goodwill or (gain from acquisition)?
a. P(8,500)
b. P8,500
c. P11,550
d. P(11,550)

3. Assuming PIPA acquired 80% of the outstanding common stock of SISA for P68,400 and NCI is measured at its proportionate share
of SISA Company’s identifiable net assets, how much is the consolidated stockholders’ equity on the date of acquisition?
a. P705,000
b. P709,800 CSHE SHE of Parent Agg 1
c. P723,300 Books 705,000 Cash 68,400
d. P728,100 Gain 4,800 NCI 18,300 86,700
NCI 18,300 Agg 2 FVNA 91,500
728,100 Gain (4,800)

4. Assuming PIPA acquired 90% of the outstanding common stock of SISA for P121,500 and NCI is measured at fair value,
how much is the total consolidated assets on the date of acquisition?

Assets - Parent at CA/BV 750,000 Liab - P 45,000


Assets - Sub at FV 99,000 Liab - S 7,500
GW 43,500 *Conso SHE 718,500
Less: Cash 121,500
Conso Assets 771,000 Conso L and SHE?? 771,000

771000

* SHE - P 705,000
NCI 13,500
CSHE 718,500

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