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Compute the combined net income for 2021.

Compute the combined net income for 2021.

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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Prateroon’s asset has a book value of P10,460,00 and a fair market value of P11,500,000 and the book value of its liabilities amounted to P3,250,000 and the fair market value of P4,000,000.

 

On January 1, 2020 Prateroon Company purchased all the net assets of Stranemon Company consisting of: > Issuance of 20,000 unissued shares of its P10 par value ordinary share capital. As of this date, the shares of Prateroon were selling at P40 per share. > Issuance of bonds with a face value of P300,000 but are currently at 110. > A contingent payment of P200,000 cash on January 1, 2020, if the average income of Stranemon Company during the two-year period (2020-2021) exceeds P250,000 per year. Prateroon estimates that there is a 20% chance or probability that the P200,000 payment will be required. > Issuance of 5,000 additional shares on January 1, 2022 to the former shareholders of Stranemon Company if the average income cover the next two years (2020-2021) equalled or exceeded P350,000. The additional 5,000 shares expected to be issued are valued at P75,000. Professional fees of P9,000 were also paid by Prateroon to its external auditors to finalize the business combination. As of the date of acquisition, Stranemon Company reported the following book value and current market data: Вook Book Fair Fair Value Value Value Value Cash 60,000 60,000 Accounts Payable 36,000 40,000 Inventory 120,000 180,000 Ordinary Share Capital 720,000 Buildings, net 500,000 560,000 Share Premium 164,000 Equipment, net 410,000 440,000 Retained Earnings 170,000 Compute the Consolidated Total Liabilities on January 1, 2020.
Transcribed Image Text:On January 1, 2020 Prateroon Company purchased all the net assets of Stranemon Company consisting of: > Issuance of 20,000 unissued shares of its P10 par value ordinary share capital. As of this date, the shares of Prateroon were selling at P40 per share. > Issuance of bonds with a face value of P300,000 but are currently at 110. > A contingent payment of P200,000 cash on January 1, 2020, if the average income of Stranemon Company during the two-year period (2020-2021) exceeds P250,000 per year. Prateroon estimates that there is a 20% chance or probability that the P200,000 payment will be required. > Issuance of 5,000 additional shares on January 1, 2022 to the former shareholders of Stranemon Company if the average income cover the next two years (2020-2021) equalled or exceeded P350,000. The additional 5,000 shares expected to be issued are valued at P75,000. Professional fees of P9,000 were also paid by Prateroon to its external auditors to finalize the business combination. As of the date of acquisition, Stranemon Company reported the following book value and current market data: Вook Book Fair Fair Value Value Value Value Cash 60,000 60,000 Accounts Payable 36,000 40,000 Inventory 120,000 180,000 Ordinary Share Capital 720,000 Buildings, net 500,000 560,000 Share Premium 164,000 Equipment, net 410,000 440,000 Retained Earnings 170,000 Compute the Consolidated Total Liabilities on January 1, 2020.
Selected accounts from the December 31, 2021 trial balances of DEF Corp. and its branch follow: DEF Corp. (550,000) 380,000 B Branch Sales (310,000) Purchases 50,000 Expenses 104,000 58,100 Beg. Inventory 46,000 116,600 23,100 Branch Current Shipment from Home Office Freight in Home Office Current Shipment to branch Branch merchandise markup 209,000 15,000 11,000 (106,600) (200,000) (22,000) As of December 31, 2021, a shipment with a billing price of P11,000 was in transit to the branch. Freight cost, is always 5% of the billing price. Merchandise on hand at year-end were: at home office , P64,000 at cost; at branch P33,000 at billing price and P15,000 purchased from outsiders. Compute the combined net income for 2021.
Transcribed Image Text:Selected accounts from the December 31, 2021 trial balances of DEF Corp. and its branch follow: DEF Corp. (550,000) 380,000 B Branch Sales (310,000) Purchases 50,000 Expenses 104,000 58,100 Beg. Inventory 46,000 116,600 23,100 Branch Current Shipment from Home Office Freight in Home Office Current Shipment to branch Branch merchandise markup 209,000 15,000 11,000 (106,600) (200,000) (22,000) As of December 31, 2021, a shipment with a billing price of P11,000 was in transit to the branch. Freight cost, is always 5% of the billing price. Merchandise on hand at year-end were: at home office , P64,000 at cost; at branch P33,000 at billing price and P15,000 purchased from outsiders. Compute the combined net income for 2021.
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