On January 1, 2021, XYZ Corp. acquires 100% interest in ABC Corp. in exchange for XYZS 10,000 shares with par value per share of P20 and fair value per shareof P200. ABC's net identifiable assets have a fair value of P1,900,000. In addition, XYZ Corp. agrees to issue additional 2.000 shares if ABC's 2021 profit willexceed P3,600,000. The fair value of the contingent consideration is P280,0001. ABC's 2021 profit is P3,800,000. XYZ Corp. issues the additional shares on January 14, 2022. Provide the journal entries on January 14, 2022.2. ABC's 2021 profit is P2.800,000. Provide the journal entries.

Contingent Consideration - The consideration paid by the Acquirer to the Acquiree in exchange for…

Answered: On January 1, 2021, XYZ Corp. acquires…

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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On January 1 2021,ABC acquires 100% interest in CDE in exchange for ABC’s 10,000 shares with par value per share of P20 and fair value per share of P200. CDE’s net identifiable assets have fair value of P1,920,000 and a book value of P1,850,000. In addition, ABC agrees to provide an additional payment of P400,000 if CDE’s 2021 net income will except P3,600,000. The fair value of the contingent consideration is P280,000. The net identifiable asset of ABC have a book value of P3,250,000 and the fair value of P3,375,000. Compute for the consolidated net identifiable asset after the acquisition.
On January 1, 2020, AB Company purchased the net assets of the CD Company by issuing 100,000 shares of its P1 par value stock when the fair value of the stock was P6.20. It was furtheragreed that Honey Mahogany would pay an additional amount on January 1, 2022, if the average income during the 2-year period of 2020-2021 exceeded P80,000 per year. The expected value of this consideration was calculated as P184,000; the measurement period is one year. What amount will be recorded as goodwill on January 1, 2020?A. ZeroB. 100,000C. 180,000D. 284,000
On January 1, 2021, Mintal Company, an SME, purchased 10,000 shares of Los Amigos Company P100 par ordinary shares capital for P1,200,000 to be held as at fair value through other comprehensive income. On March 1, 2021, Mintal Company received a 20% bonus issue. On December 1, 2021, Mintal Company sold all the shares that were received under the bonus issue at P140 per share, and exchanged 5,000 shares of Los Amigos Company for an equipment with a fair value of P750,000. The gain on exchange to be recorded by Mintal Company is
FILA Company agreed to pay $850,000 cash and issue 50,000 shares of its $10 par (20 current fair value a share on September 30, 2021, to COOKED Corporation for all the net assets of COOKED except cash. In addition, FILA agreed that if the fair market value of its ordinary share was not $20 a share or more on September 30, 2022, a sufficient number of additional ordinary shares would be issued to COOKED to make the ste market value of its FILA ordinary shareholdings equal to $1 million on that date. The statement of l position of COOKED on September 30, 2021 with related current fair values of assets and liabilities, is as follows: Book value Fair value Cash 100,000 100,000 Accounts receivable, net 300,000 300,000 Merchandise inventory 520,000 680,000 Prepaid Expenses 20,000 20,000 Land 180,000 180,000 Building 500,000 650,000 Equipment 1,000,000 1,250,000 Other Plant Assets 80,000 100,000 Book Value…
On January 5, 2021, Sisig Corp. purchased 50,000 shares of Toyomansi Company ordinary share for P3,600,000. Sisig Corp. classified the investment as EQUITY INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME. On June 2, 2021, Sisig received 50,000 rights from Toyomansi. Each right entitles the holder to acquire one share for P70. On October 4, 2021, the company exercised 60% of rights when the fair value of shares is P90/share. Sisig sold the remaining rights on December 23, 2021 for a P15 per right. The investment income from the EI@FVTOCI reported in the profit or loss for 2021 is: a. P-0- b. P900,000 c. P300,000 d. P600,000
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