Acquirer Company issued 80,000 new shares of its P10 par value ordinary shares and paid cash of P2,000,000 for the net assets of Acquiree Company on January 2, 2022. Acquirer also agreed to pay P500,000 one year after the acquisition date if the net income of Acquiree will exceed P10,000,000. The share of Acquirer was valued at P15. At this date, the fair value and book value of Acquiree’s identifiable assets and liabilities were the same except for inventory which was undervalued by P50,000 and Equipment which was underdepreciated by P100,000. The financial statements of Acquirer and Acquiree were (see image below). As of the acquisition date, there was only a low probability of the profit target being met, so the fair value of the additional consideration was determined at P150,000. Acquirer also incurred the following costs: Finder’s fee - 20,000; Professional fee - 60,000; Audit and accountant’s fee related to stock issuance - 10,000 and Printing and registration of shares - 5,000. Answer the following: a. How much is the Consideration Transferred? b. How much is the Goodwill/Gain on Bargain Purchase?
Acquirer Company issued 80,000 new shares of its P10 par value ordinary shares and paid cash of P2,000,000 for the net assets of Acquiree Company on January 2, 2022. Acquirer also agreed to pay P500,000 one year after the acquisition date if the net income of Acquiree will exceed P10,000,000. The share of Acquirer was valued at P15. At this date, the fair value and book value of Acquiree’s identifiable assets and liabilities were the same except for inventory which was undervalued by P50,000 and Equipment which was underdepreciated by P100,000. The financial statements of Acquirer and Acquiree were (see image below).
As of the acquisition date, there was only a low probability of the profit target being met, so the fair value of the additional consideration was determined at P150,000. Acquirer also incurred the following costs: Finder’s fee - 20,000; Professional fee - 60,000; Audit and accountant’s fee related to stock issuance - 10,000 and Printing and registration of shares - 5,000.
Answer the following:
a. How much is the Consideration Transferred?
b. How much is the
c.
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