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a. Prepare a journal entry or entries in Pal Corporation's books to record the stock acquisition. b. Determine and allocate the fair value and book value differential. c. Prepare elimination entries.

a. Prepare a journal entry or entries in Pal Corporation's books to record the stock acquisition. b. Determine and allocate the fair value and book value differential. c. Prepare elimination entries.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 12-9 On January 1, 2016, Pal Corporation issued 100,000 shares of its own P10 par value ordinary share for 90,000 shares of the outstanding shares of Sugar Corporation. combination, the details in the balance sheet information of the two corporations were as Pal's share on January 1, 2016 was selling at P70 per share. Just before the business follows: Cash Inventories Other current assets Land Plant and equipment - net Liabilities Share capital, P10 par value Share premium Retained earnings Pal book value P 250,000 550,000 1,100,000 1,000,000 6,600,000 P9,500,000 P2,200,000 5,000,000 1,700,000 600,000 P9,500,000 Sugar book value Sugar fair value P 120,000 P 120,000 320,000 360,000 900,000 1,100,000 300,000 900,000 2,500,000 3,750,000 P4,140,000 P6,230,000 P 500,000 P 500,000 1,000,000 400,000 2,240,000 P4,140,000 Pal incurred P50,000 direct acquisition-related costs and P50,000 share issue costs. Only the parent's goodwill is to be recognized in this acquisition. Required: a. Prepare a journal entry or entries in Pal Corporation's books to record the stock acquisition. b. Determine and allocate the fair value and book value differential. c. Prepare elimination entries. d. Prepare a working paper. 429 CONSOLIDATION ON THE DATE OF ACQUISITION
Transcribed Image Text:Problem 12-9 On January 1, 2016, Pal Corporation issued 100,000 shares of its own P10 par value ordinary share for 90,000 shares of the outstanding shares of Sugar Corporation. combination, the details in the balance sheet information of the two corporations were as Pal's share on January 1, 2016 was selling at P70 per share. Just before the business follows: Cash Inventories Other current assets Land Plant and equipment - net Liabilities Share capital, P10 par value Share premium Retained earnings Pal book value P 250,000 550,000 1,100,000 1,000,000 6,600,000 P9,500,000 P2,200,000 5,000,000 1,700,000 600,000 P9,500,000 Sugar book value Sugar fair value P 120,000 P 120,000 320,000 360,000 900,000 1,100,000 300,000 900,000 2,500,000 3,750,000 P4,140,000 P6,230,000 P 500,000 P 500,000 1,000,000 400,000 2,240,000 P4,140,000 Pal incurred P50,000 direct acquisition-related costs and P50,000 share issue costs. Only the parent's goodwill is to be recognized in this acquisition. Required: a. Prepare a journal entry or entries in Pal Corporation's books to record the stock acquisition. b. Determine and allocate the fair value and book value differential. c. Prepare elimination entries. d. Prepare a working paper. 429 CONSOLIDATION ON THE DATE OF ACQUISITION
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