1. Determine the goodwill or gain on bargain purchase from the above acquisition. 2. Give the adjusting entries that will be made on the book of Tanangonan. 3. Prepare the Statement of Financial Position (SFP) of Tanangonan after the merger.
On January 1, 20X2, Tanangonan Company acquired all the assets and assumed all the liabilities of Ong
Company. In exchange for the net assets of Ong, Tanangonan gave its bond payable with a maturity value
of P600,000 with a stated rate of 10% interest payable semiannually on June 30 and December 31. The
said bond will also mature on January 1, 20X2, and has a yield rate of 12%.
The
Tanangonan Ong
Book Value Book Value Fair Value
Cash P250,000 P114,000 P114,000
Receivables 352,700 150,000 135,000
Inventories 848,300 232,000 310,000
Land 700,000 100,000 315,000
Buildings 950,000 410,000 54,900
Equipment 262,750 136,450 39,450
Accumulated Depreciation – Equipment (70,050) (90,450)
Total Assets P2,968,700 P881,500 P968,350
Current Liabilities P292,700 P95,300 P95,300
Bond Payable 300,000 260,000
Common Stock, P15 par value 1,200,000
Common Stock, P5 par value 236,500
Other Contributed Capital 950,000 170,000
Total Equities P2,968,750 P881,500
Required:
1. Determine the
2. Give the
3. Prepare the Statement of Financial Position (SFP) of Tanangonan after the merger.
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