Compute the added number of shares to be issued TOOLAD Company agreed agreed to pay P850,000 cash and issue 50,000 shares of its P10 par (20 current fair value ashare) ordinary share on September 30, 2021, to OVER Corporation for all the net assets of OVER except cash. Inaddition, TOOLAD agreed that if the fair market value of its ordinary share was not P20 a share or more onSeptember 30, 2022, a sufficient number of additional ordinary shares would be issued to OVER to make theaggregate market value of its TOOLAD ordinary shareholdings equal to P1 million on that date. The statement offinancial position of OVER on September 30, 2021 with related current fair values of assets and liabilities, is asfollows:ВookВookFairFair ValueValueValueValueCash100,000100,000 Current Liabilities700,000 700,000Accounts Receivable, net300,000300,000 Long-term Debt500,000 480,000Merchandise Inventory520,000680,000 Ordinary Share, P5 par600,000Prepaid Expenses20,00020,000 Share Premium400,000Land180,000180,000 Retained Earnings500,000Building500,000650,000Equipment1,000,0001,250,000Other Plant Assets80,000100,000Out-of-pocket costs of the business combination paid by TOOLAD on September 30, 2021, were as follows: Auditfees (SEC registration statement)- P30,000; Finder's Fee-P35,000; Legal Fees (business combination )-P15,000; Legalfees (SEC registration statement)-P20,000; Printing Cost (securities and SEC registration statement)-P25,000; SECregistration fee-P350. Assume that on September 30, 2022, the market value of TOOLAD Corporation's ordinaryshare was P16 a share. Compute the added number of shares to be issued.

Purchase Consideration can be in the form of Assets like cash or stock or in the form of Equity.

Answered: Compute the added number of shares to…

Business

Accounting

Compute the added number of shares to be issued

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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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

Compute the added number of shares to be issued

TOOLAD Company agreed agreed to pay P850,000 cash and issue 50,000 shares of its P10 par (20 current fair value a
share) ordinary share on September 30, 2021, to OVER Corporation for all the net assets of OVER except cash. In
addition, TOOLAD agreed that if the fair market value of its ordinary share was not P20 a share or more on
September 30, 2022, a sufficient number of additional ordinary shares would be issued to OVER to make the
aggregate market value of its TOOLAD ordinary shareholdings equal to P1 million on that date. The statement of
financial position of OVER on September 30, 2021 with related current fair values of assets and liabilities, is as
follows:
Вook
Вook
Fair
Fair Value
Value
Value
Value
Cash
100,000
100,000 Current Liabilities
700,000 700,000
Accounts Receivable, net
300,000
300,000 Long-term Debt
500,000 480,000
Merchandise Inventory
520,000
680,000 Ordinary Share, P5 par
600,000
Prepaid Expenses
20,000
20,000 Share Premium
400,000
Land
180,000
180,000 Retained Earnings
500,000
Building
500,000
650,000
Equipment
1,000,000
1,250,000
Other Plant Assets
80,000
100,000
Out-of-pocket costs of the business combination paid by TOOLAD on September 30, 2021, were as follows: Audit
fees (SEC registration statement)- P30,000; Finder's Fee-P35,000; Legal Fees (business combination )-P15,000; Legal
fees (SEC registration statement)-P20,000; Printing Cost (securities and SEC registration statement)-P25,000; SEC
registration fee-P350. Assume that on September 30, 2022, the market value of TOOLAD Corporation's ordinary
share was P16 a share. Compute the added number of shares to be issued.

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