On January 1, 20x1, Pinup Corp. acquired 34,560 outstanding ordinary shares of Slug Corp. for a cash consideration of P5,158,40O. The shareholders' equity of Slug Corp. on the date of business combination is presented below: Ordinary shares P100 par value 5,760,000 Share premium 1,600,000 Retained Earnings 960,000 Pinup Corp agreed to issue additional 1,000 shares to former owners of Slug Corp if the market price per share of Pinup Corp shares increase to P120 per share. On the acquisition date, the contingent consideration was estimated at P80,000.

On January 1, 20x1, Pinup Corp. acquired 34,560 outstanding ordinary shares of Slug Corp. for a cash consideration of P5,158,40O. The shareholders' equity of Slug Corp. on the date of business combination is presented below: Ordinary shares P100 par value 5,760,000 Share premium 1,600,000 Retained Earnings 960,000 Pinup Corp agreed to issue additional 1,000 shares to former owners of Slug Corp if the market price per share of Pinup Corp shares increase to P120 per share. On the acquisition date, the contingent consideration was estimated at P80,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

SRK Services acquired 30% of the outstanding common stock of KRK Company on January 1, 2010, by paying $800,000 for the 45,000 shares. KRK declared and paid $0.30 per share cash dividends on March 15, June 15, September 15, and December 15, 2010. KRK reported net income of $320,000 for the year. At December 31, 2010, the market price of KRK common stock was $24 per share. Instructions (a) Prepare the journal entries for SRK Services for 2010 assuming SRK cannot exercise significant influence over KRK.
100% of the equity share capital of RRR Corp. was acquired by QQQ Corp. on June 30, 2021. QQQ Corp. issued 500,000 new ordinary shares with a par value of P1.0 and fair value of P8.0 each at the acquisition date. In addition, the acquisition resulted in QQQ Corp. incurring fees payable to external advisers of P200,000 and share issue costs of P180,000. In accordance with PFRS 3, goodwill at acquisition date is measured by subtracting the identifiable assets acquired and the liabilities assumed from:*... a. P 4.18 million b. P 4.20 million c. P 4.39 million d. P 4.00 million pls. answer it asap thank you
On January 1, 2018, Parent acquired 30,000 out of 100,000 outstanding ordinary shares of Sub for P90,000 or 30% interest. For the six months ended June 30, 2018, Sub reported net income of P40,000.On July 1, 2018, Parent acquired additional 60,000 ordinary shares of Sub or 60% interest at a price of P4 per share or total cost of P240,000. Parent paid P20,000 acquisition related costs and P10,000 indirect costs of business combination. The acquisition piece per share of the additional shares clearly reflected the fair value of the existing interest of Parent in Sub. It is the policy of Parent to initially measure the noncontrolling interest proportionate in net assets of the acquiree at fair value. The fair value of the noncontrolling interest in net assets of the acquiree is reliably measured at P50,000. At the acquisition date, the net assets of Sub were reported at P400,000. An asset of Sub was overvalued by P50,000 while one liability was overvalued by P30,000. what is the…
2. On January 1, year 1, ABC Company purchased 80% of the stock of XYZ for P4,000,000 cash. Prior to the acquisition, XYZ had 100,000 shares of stock outstanding. On the date of acquisition, XYZ's stock had fair value of P52 per share. During the year, XYZ reported P280,000 in net income and paid dividends of P50,000. What is the balance in the noncontrolling interest account on ABC's balance sheet on December 31, year 1?
Parent Company issued 80,000 new shares of its P10 par value ordinary shares and paid cash of P2,000,000 for the 80% interest of Subsidiary Company on January 2, 2022. The share of Parent was valued at P15. The stockholders’ equity of Parent and Subsidiary at the date of acquisition were as follows (see image below).The fair value and book value of Subsidiary’s identifiable assets and liabilities were the same except for inventory which was undervalued by P50,000 and Equipment which was underdepreciated by P100,000 with remaining useful life of 10 years. The parent elected to measure NCI using fair value method. At the end of December 31, 2022, Parent reported a net income of P300,000 and paid dividends of P50,000 while Subsidiary reported a net income of P200,000 and paid dividends of P20,000 to Parent. Only 75% of the beginning inventory of Subsidiary was sold during the period. It was also determined that the goodwill was impaired and to be reported at P800,000. a. How much is the…
On January 1, 2020, Parent Company issued 10,000 shares of its P5 par ordinary share capital for all the 5,000 issued and outstanding shares of Subsidiary Company’s P1 par share capital. The market value of the share was P10. Parent also incurred acquisition related cost amounting to P20,000 including cost of issuing and registering new shares of P10,000. On this date, the shareholder’s equity of Subsidiary was: Ordinary Share Capital - 5,000; Paid-In Capital in excess of par - 30,000; and Retained Earnings - 50,000. The journal entry to record the business combination should include: A. A debit of P20,000 to the Business Combination Expenses B. A debit of P10,000 to the Share Premium C. A credit of P100,000 to the Ordinary Share Capital D. A debit of P50,000 to the Ordinary Share Capital
(TCO A) Bend Inc. holds 25% of the outstanding voting shares of Calico Co. and appropriately applies the equity method of accounting. Amortization associated with this investment equals $9,000 per year. For 20X3, Calico reported earnings of $80,000 and paid cash dividends of $30,000. During 20X3, Calico acquired inventory for $57,600, which was then sold to Bend for $90,000. At the end of 20X3, Bend still held some of this inventory at its transfer price of $40,000.Required:(1) Determine the amount of intra-entity profit at the end of 20X3.(2) Determine the amount of Equity in Investee Income that Bend should have reported for 20X3.
Caroline Corporation had the following investment at FVTPL at the beginning of the current year: Fair ValueXYZ Corporation, 10,000 shares (originally cost P1,000,000) - P1,200,000DEF Company, 20,000 shares (originally cost P500,000) - 450,000During the current year, the following transactions occurred: Feb. 28 XYZ Corporation declared a 3-for-2 share split.Apr 31 DEF Company declared a 20% share dividend. The market value of DEF Company on this dateis P3.00. June 30 Sold 5,000 shares of DEF Company for P100,000, less brokers fee of P1,000.July 31 Sold 5,000 shares of XYZ Corporation for P135.Sept 30 Received share rights to purchase one share of XYZ Corporation for P100 per share. Thecompany should tender five rights for every share acquired. The market price of XYZCorporation shares on this date is P140.Oct. 31 Exercise all the share rights from XYZ Corporation. Dec. 31 The…
Parent Company, an SME issued 60,000 shares of P100 par value ordinary shares for all the outstanding stock of Sub Company in business combination consummated on January 2, 2022. Parent's ordinary shares were selling at P160/sh at the time of acquisition. The book value of Sub's net assets was P7,600,000. Out of pocket costs of combination were as follows: Legal fees for business combination, P24,000; printing cost for stock certificate, P18,800; finder's fee, P54,000; and CPA audit fee for business combination, P38,000. A contingent consideration that is probable and can be reasonably estimated amounted to P36,400. The total amount to be capitalized as cost of investment in Sub Company is: * G O 9,752,400 O 9,600,000 O 9,716,000 O 9,636,400
Entity G acquired a 40% interest in Pokus Corp. for P1,700,000 on January 1,2021. The shareholders' equality of Pokus Corp. on January 1 and December 31, 2021 is presented below: Share capital (January 1) P3,000,000 (December 31) P3,000,000 Revaluation surplus (January 1) - (December 31) P1,300,000 Retained earnings (January 1) P1,000,000 (December 31) P1,500,000 On January 1, 2021, all the identifiable assets and liabilities of Pokus Corp. were recorded at fair value. Pokus Corp. reported profit before income tax of P1,000,000 and paid dividends of P150,000 to shareholders during the current year. The tax rate is 35% The revaluation surplus is the result of the revaluation of land recognized by Pokus Corp. on December 31,2021. Pokus presents other comprehensive income net of applicable income tax. Additionally, depreciation is provided by Pokus Corp. on the diminishing balance method whereas Entity G uses the staright-line. Had Pokus Corp. used the straight line, the acuumulated…
Peterpan Company issued 96,000 shares of its P25 par common stock for the net assets of Tinkerbell Corp. in business combination completed on March 1, 2020. The Acquiree’s net assets are worth P3,040,000 at fair market value. Out of pocket costs of the combination were as follows: Finder’s fee 20,800 Contingent consideration (probable and measurable) 14,400 Legal fee 21,600 Printing of stock certificates 6,800 Professional fees paid to a CPA 16,800 Fees paid to company lawyers 18,760 Fees paid to company accountants 31,120 The goodwill from the business combination is P334,400. How much is the fair market value of shares of Peterpan Company at March 1, 2020? A. 35B. 40C. 30D. 25
On January 1, 20x2, Pfieter Company purchased 80 percent of the outstanding shares of Sedrosky Company at a cost of P1,080,000. On that date, Sedrosky Company had P600,000 worth of ordinary shares and P750,000 worth of accumulated profits. For 20x2, Sedrosky Company reported income of P270,000 and paid dividends of P90,000. All of the assets and liabilities of Sedrosky Company are at fair market value. On December 31, 20x2, Pfieter Company sold equipment to Sedrosky Company for P112,500 that had a cost of P67,500. The equipment is expected to have a useful life of 10 years from this date. For the year 20x2, Pfieter Company reported income from its own operations in the amount of P300,000, which included the gain of P45,000 on equipment sold to Sedrosky Company. What is the Non-controlling Interest in Net Assets of Subsidiary as of December 31, 20x2?