In December 2017, Parent Company started negotiating for the acquisition of Sub Company. The offer was for shareholders of Sub Company to receive one Parent Company share with a market value of P125 for every four shares held in exchange for all assets of Sub Company (except cash and shares in listed companies). In addition to the shares, Parent Company wil transfer its shares in listed companies which has a fair market value of P750,000. Parent Company wil also pay Sub Company sufficient cash to enable Sub Company to pay all its creditors then Sub will liquidate. The shareholders of Sub Company accepted the offer. Balance Sheet on December 31, 2017 is given below: Cash Accounts receivable Inventory Shares in listed company Land and bulilding - net Property, plant & equipment Accounts payable Mortgage loan Equity, Common stock, P50 par Retained earmings Parent 7,250,000 1,700,000 2,800,000 800,000 3,500,000 6,500,000 3,250,000 7,500,000 10,000,000 1,800,000 Sub 260,000 1,065.000 1,500,000 1,100,000 2,000,000 5.250.000 2,000,000 1,500,000 7,500,000 175,000 The net assets of Sub Company are reflected at their fair values except for the following: Inventory, P1,300,000 fair market value Land and building. P4,000,000 fair market value Shares in listed companies, P900,000 fair market value
In December 2017, Parent Company started negotiating for the acquisition of Sub Company. The offer was for shareholders of Sub Company to receive one Parent Company share with a market value of P125 for every four shares held in exchange for all assets of Sub Company (except cash and shares in listed companies). In addition to the shares, Parent Company wil transfer its shares in listed companies which has a fair market value of P750,000. Parent Company wil also pay Sub Company sufficient cash to enable Sub Company to pay all its creditors then Sub will liquidate. The shareholders of Sub Company accepted the offer. Balance Sheet on December 31, 2017 is given below: Cash Accounts receivable Inventory Shares in listed company Land and bulilding - net Property, plant & equipment Accounts payable Mortgage loan Equity, Common stock, P50 par Retained earmings Parent 7,250,000 1,700,000 2,800,000 800,000 3,500,000 6,500,000 3,250,000 7,500,000 10,000,000 1,800,000 Sub 260,000 1,065.000 1,500,000 1,100,000 2,000,000 5.250.000 2,000,000 1,500,000 7,500,000 175,000 The net assets of Sub Company are reflected at their fair values except for the following: Inventory, P1,300,000 fair market value Land and building. P4,000,000 fair market value Shares in listed companies, P900,000 fair market value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
31
Transcribed Image Text:Determine the total assets of Parent Company immediately after the merger. * 4
In December 2017, Parent Company started negotiating for the acquisition of Sub Company. The offer was for shareholders of Sub
Company to receive one Parent Company share with a market value of P125 for every four shares held in exchange for all assets of Sub
Company (except cash and shares in listed companies). In addition to the shares, Parent Company will transfer its shares in listed
companies which has a fair market value of P750,000. Parent Company will also pay Sub Company sufficient cash to enable Sub
Company to pay all its creditors then Sub will liquidate. The shareholders of Sub Company accepted the offer.
Balance Sheet on December 31, 2017 is given below.
Parent
Sub
260,000
Cash
7,250,000
Accounts receivable
1,700,000
2,800,000
800,000
3,500,000
1,065,000
1,500,000
1,100,000
2,000,000
Inventory
Shares in listed company
Land and building - net
Property, plant & equipment
Accounts payable
Mortgage loan
Equity, Common stock, P50 par
Retained earnings
6,500,000
5,250,000
3,250,000
7,500,000
10,000,000
1,800,000
2,000,000
1,500,000
7,500,000
175,000
The net assets of Sub Company are reflected at their fair values except for the following:
Inventory, P1,300,000 fair market value
Land and building. P4.000.000 fair market value
Shares in listed companies, P900,000 fair market value
O 35,325,000
O 34,165,000
O 29,865,000
O 30,665,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education