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 ofPrateroon 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 duringthe two-year period (2020-2021) exceeds P250,000 per year. Prateroon estimates that there is a 20% chance orprobability 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 theaverage income cover the next two years (2020-2021) equalled or exceeded P350,000. The additional 5,000shares 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:ВookBookFairFair ValueValueValueValueCash60,00060,000 Accounts Payable36,000 40,000Inventory120,000180,000 Ordinary Share Capital720,000Buildings, net500,000560,000 Share Premium164,000Equipment, net410,000440,000 Retained Earnings170,000Compute the Consolidated Total Liabilities on January 1, 2020.

Settlement in the form of cash: Estimated settlement value x Percentage of probability = P 200,000 x…

Answered: Compute the Consolidated Total…

Business

Accounting

Compute the Consolidated Total Liabilities on January 1, 2020.

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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