overvalued Building. As a consideration, OPQ Co. issued its own shares of stock with a market value of P320,000. The merger resulted into P140,000 goodwill. Assuming OPQ Co. had
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On September 18, 2020, OPQ Co. acquired all of TUV Inc.’s P400,000 identifiable assets and P100,000 liabilities. Book values of TUV’s assets and liabilities equal their fair values except for an overvalued Building. As a consideration, OPQ Co. issued its own shares of stock with a market value of P320,000. The merger resulted into P140,000
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- Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2020, for $652,000 in cash. Annual excess amortization of $13,700 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $498,000, and Rambis reported a $232,000 balance. Herbert reported internal net income of $44,750 in 2020 and $58,350 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $23,300 in 2020 and $36,900 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert’s internal net income figures above do not include any income from the subsidiary. If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? Equity method, initial value method and partial…On January 1, 2021, Parent Co. acquired 80% of Subsidiary Inc.’s outstanding stocks for P1,600,000 cash. Subsidiary Inc.’s balance sheet shows P3,000,000 identifiable assets and P1,800,000 liabilities. All assets and liabilities of Setter are fairly valued, except for an undervalued equipment. The stock acquisition resulted to a goodwill of P700,000. Assume Parent had P5,100,000 total assets prior to the said transaction. NCI is measured at fair value. How much is the total assets in the consolidated balance sheet after the stock acquisition?Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2020, for $592,000 in cash. Annual excess amortization of $15,700 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $408,000, and Rambis reported a $205,000 balance. Herbert reported internal net income of $45,000 in 2020 and $58,700 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $25,900 in 2020 and $39,600 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert’s internal net income figures above do not include any income from the subsidiary. If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? Consolidated retained earnings (equity method),…
- On August 31, 2020, Laida Corporation purchased all the net assets of Magtalas Corporation by transferring cash of P500,000 and issuing 40,000 ordinary shares with par value of P50 (current fair value is P60). The following are expenses incurred and paid by Laida Corporation in connection with the business combination on the date of acquisition: Underwriting costsP10,000Consultant’s fees20,000Newspaper publication fees5,000SEC registration fees8,000Stock exchange listing fees5,000Indirect acquisition costs12,000How much expense is charged to share premium?Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2020, for $592,000 in cash. Annual excess amortization of $15,700 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $408,000, and Rambis reported a $205,000 balance. Herbert reported internal net income of $45,000 in 2020 and $58,700 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $25,900 in 2020 and $39,600 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert’s internal net income figures above do not include any income from the subsidiary. If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? b. Under each of the following situations, what is…On August 31, 2020, SG Corporation (SME) purchased all the net assets of Popsters Corporation by transferring cash of P500,000 and issuing 40,000 ordinary shares with par value of P50 (current fair value is P60). The following are expenses incurred and paid by SG Corporation in connection with the business combination on the date of acquisition: Underwriting costs, P10,000; Consultant’s Fees, 20,000; Newspaper publication fees, 5,000; SEC registration fees, 8,000; Stock exchange listing fees, 6,000; Indirect acquisition costs, 12,000. Balance sheet of Popsters shows assets of P2,800,000 and liabilities of P400,000. 1. How much is the goodwill or (gain on bargain purchase) on the date of acquisition if Inventories of Popsters is undervalued by P200,000 and a liability is overvalued by 100,000? 2. How much is the capitalized cost of investment?
- Herbert, Inc., acquired all of Rambis Company's outstanding stock on January 1, 2020, for $622,000 in cash. Annual excess amortization of $11,300 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $465,000, an Rambis reported a $211,000 balance. Herbert reported internal net income of $43,500 in 2020 and $56,900 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $22,100 in 2020 and $35,500 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert's internal net income figures above do not include any income from the subsidiary. • If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? • What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? b. Under each of the following situations, what is…On August 31, 2020, Laida Corporation purchased all the net assets of Magtalas Corporation by transferring cash of P500,000 and issuing 40,000 ordinary shares with par value of P50 (current fair value is P60). The following are expenses incurred and paid by Laida Corporation in connection with the business combination on the date of acquisition: Underwriting costs P10,000 Consultant's fees 20,000 Newspaper publication fees 5,000 SEC registration fees 8,000 Stock exchange listing fees 5,000 Indirect acquisition costs 12, 000 1. How much expense is charged to share premium?On April 1, 2019, Itaewon Corp. paid cash of P1,240,000 for all the net assets of Sunshine Company appropriately accounted for as a merger. The recorded assets and liabilities of Sunshine Company on April 5, 2019 follow: 300,000 420,000 100,000 0 Del Luna Corporation concluded that the fair value of Scarlet Company was P160,000 and paid that amount to acquire all of its net assets. Scarlet reported assets with a book value of P120,000 and a fair value of 196,000 and liabilities with a book value and fair value of P46,000 on the date of combination. Del Luna also paid P6,000 to a search firm for finder’s fees related to acquisition. What amount will be recorded as goodwill by Del Luna Corporation? 26,000 16,000 0 10,000 On January 1 2021,NOP acquires 100% interest in QRS in exchange for NOP’s 10,000 shares with par value per share of P20 and fair value per share of P200. QRS’s net identifiable assets have fair value of P1,920,000 and a book value of P1,850,000. In addition, NOP…
- On May 31, 2020, Roddick Company paid $3,400,000 to acquire all of the ordinary shares of Bolt Corporation, which became a division of Roddick. Bolt reported the following statement of financial position at the time of the acquisition: Equity $2,500,000 Non-current assets $2,700,000 Non-current liabilities 500,000 Current assets 900,000 Current liabilities 600,000 Total assets $3,600,000 Total equity and liabilities $3,600,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Bolt was $2,800,000. On December 31, 2020, Bolt reports the following statement of financial position information: Current assets $ 800,000 Non-current assets (including goodwill recognized in purchase) 2,400,000 Current liabilities (700,000) Non-current liabilities (500,000) Net assets $2,000,000 It is determined that the recoverable amount value of the Bolt…On January 2, 2020, Waterway Company acquired 90% of the outstanding common stock of Oriole Company for $549,000 cash. Just before the acquisition, the balance sheets of the two companies were as follows: Cash Accounts Receivable (net) Inventory Plant and Equipment (net) Land Total Assets Accounts Payable Mortgage Payable Common Stock, $2 par value Other Contributed Capital Retained Earnings Total Equities Waterway $600,000 345,000 295,000 995,000 180,000 1,050,000 580,000 Oriole 303,000 $155,000 $2,415,000 74,000 $2,415,000 $770,000 168,000 $312,000 $134,000 170,000 275,000 98,000 115,000 210,000 60,000 251,000 $770,000 The fair values of Oriole's assets and liabilities are equal to their book values with the exception of land.On January 1, 2021, Parent Co. acquired 80% of Subsidiary In's outstanding stocks for P1,600,000 cash. Subsidiary Inc's balance sheet shows P3,000,000 identifiable assets and P1,800,000 liabilities. All assets and liabilities of Setter are fairly valued, except for an undervalued equipment. The stock acquisition resulted to a goodwill of P700,000. Assume Parent had P5,100,000 total assets prior to the said transaction. NCI is measured at fair value. How much is the total assets in the consolidated balance sheet after the stock acquisition?