The following are the balances of BIG Company and GIRL Company as of January 1, 20x1. Fair Fair Вook Value Вook BIG COMPANY Market Market Value Value Value ASSE TS LIABILITY AND EQUITY Cash 105,000 105,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 330,000 Accounts Receivable 550,000 1,300,000 1,320,000 Inventory Property, Plant and Equipment, net 220,000 2,000,000 4,790,000 4,500,000 Share Premium 775,000 ? Goodwill 100,000 100,000 Retained Earnings 1,390,000 ? Fair Вook Fair Market Book GIRL COMPANY Market Value Value Value Value Cash 300,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 550,000 500,000 Accounts Receivable 600,000 2,500,000 2,480,000 Inventory Property, Plant and Equipment, net 350,000 3,000,000 8,910,000 10,000,000 Share Premium 150,000 2,760,000 ? Goodwill 100,000 Retained Earnings 1,500,000 ? The companies combined their resources and formed BIGGEST Co. Research and development with a fair market value of P120,000 was not included in the books of Big Company. An unrecorded interest payable worth P20,000 was also not included in the books of Girl Company. The new company issues 16,000 shares of 500 par value common stocks with fair value of P550 and pays additional 1,500,000 and incurs a mortgage loan of P1,000,000. The company also paid a direct costs of 50,000 and indirect cost of 20,000. P15,000 direct cost and P5,000 stock issue cost remain unpaid. Chan Co. also pay BIG and GIRL additional P100,000 net income after 1 year if its net income exceed P3,000,000, there is a 90% chance of meeting the target income. Determine the total EQUITY of BIGGEST CO. immediately after the business combination.
The following are the balances of BIG Company and GIRL Company as of January 1, 20x1. Fair Fair Вook Value Вook BIG COMPANY Market Market Value Value Value ASSE TS LIABILITY AND EQUITY Cash 105,000 105,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 330,000 Accounts Receivable 550,000 1,300,000 1,320,000 Inventory Property, Plant and Equipment, net 220,000 2,000,000 4,790,000 4,500,000 Share Premium 775,000 ? Goodwill 100,000 100,000 Retained Earnings 1,390,000 ? Fair Вook Fair Market Book GIRL COMPANY Market Value Value Value Value Cash 300,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 550,000 500,000 Accounts Receivable 600,000 2,500,000 2,480,000 Inventory Property, Plant and Equipment, net 350,000 3,000,000 8,910,000 10,000,000 Share Premium 150,000 2,760,000 ? Goodwill 100,000 Retained Earnings 1,500,000 ? The companies combined their resources and formed BIGGEST Co. Research and development with a fair market value of P120,000 was not included in the books of Big Company. An unrecorded interest payable worth P20,000 was also not included in the books of Girl Company. The new company issues 16,000 shares of 500 par value common stocks with fair value of P550 and pays additional 1,500,000 and incurs a mortgage loan of P1,000,000. The company also paid a direct costs of 50,000 and indirect cost of 20,000. P15,000 direct cost and P5,000 stock issue cost remain unpaid. Chan Co. also pay BIG and GIRL additional P100,000 net income after 1 year if its net income exceed P3,000,000, there is a 90% chance of meeting the target income. Determine the total EQUITY of BIGGEST CO. immediately after the business combination.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following are the balances of BIG Company and GIRL Company as of January 1, 20x1.
Fair
Fair
Вook
Value
Вook
BIG COMPANY
Market
Market
Value
Value
Value
ASSE TS
LIABILITY AND EQUITY
Cash
105,000
105,000 Accounts Payable
470,000 Mortgage Payable
300,000 Ordinary Share, 20 par
300,000
330,000
Accounts Receivable
550,000
1,300,000 1,320,000
Inventory
Property, Plant and Equipment, net
220,000
2,000,000
4,790,000 4,500,000 Share Premium
775,000
?
Goodwill
100,000
100,000 Retained Earnings
1,390,000
?
Fair
Вook
Fair Market
Book
GIRL COMPANY
Market
Value
Value
Value
Value
Cash
300,000 Accounts Payable
470,000 Mortgage Payable
300,000 Ordinary Share, 20 par
300,000
550,000
500,000
Accounts Receivable
600,000
2,500,000 2,480,000
Inventory
Property, Plant and Equipment, net
350,000
3,000,000
8,910,000 10,000,000 Share Premium
150,000
2,760,000
?
Goodwill
100,000 Retained Earnings
1,500,000
?
The companies combined their resources and formed BIGGEST Co. Research and development with a fair
market value of P120,000 was not included in the books of Big Company. An unrecorded interest payable
worth P20,000 was also not included in the books of Girl Company. The new company issues 16,000 shares
of 500 par value common stocks with fair value of P550 and pays additional 1,500,000 and incurs a mortgage
loan of P1,000,000. The company also paid a direct costs of 50,000 and indirect cost of 20,000. P15,000
direct cost and P5,000 stock issue cost remain unpaid. Chan Co. also pay BIG and GIRL additional P100,000
net income after 1 year if its net income exceed P3,000,000, there is a 90% chance of meeting the target
income. Determine the total EQUITY of BIGGEST CO. immediately after the business combination.
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