acquired
Papa Corporation, a publicly-listed company, acquired Sansa Company, a privately-owned company, on
September 30, 20X1. Given below are their
acquisition:
Papa Corporation
Statement of Financial Position
September 30, 20X1
Current Assets P800 Current Liabilities 230
Non-Current Assets 1,200 Non-Current Liabilities 420
Common Stock, 100 Shares 200
Additional Paid-In Capital 350
Total Assets P2,000 Total Liabilities and Equity P2,000
Sansa Company
Statement of Financial Position
September 30, 20X1
Current Assets P600 Current Liabilities 200
Non-Current Assets 1,300 Non-Current Liabilities 500
Common Stock, 50 Shares 150
Additional Paid-In Capital 250
Retained Earnings 800
Total Assets P1,900 Total Liabilities and Equity P1,900
Additional information about the acquisition are as follows:
• Papa Corporation issues three (3) shares in exchange for each ordinary share of Sansa Company. All
of Sansa Company’s shareholders exchange their shares. Thus, Papa Corporation issues 150 shares
in exchange for all 50 shares of S Company.
• The fair value of each share of Sansa Company is P30. The quoted market price of Papa Corporation’s
shares on the said date is P22.50 per share.
• The fair value of Papa Corporation’s identifiable assets and liabilities are the same as their book values,
except for its non-current assets which have a fair value of P1,500.
Required:
1. Solve for the fair value of consideration transferred.
2. Determine the amount of
3. Prepare the consolidated statement of financial position.
Step by step
Solved in 4 steps
