2. On July 1, 2021, Mickaella Company, an SME, acquired 20% of the outstanding ordinary shares ofanother entity for P5,000,000. The book value of the acquired share was P4,000,000. The excess ofcost over book value was attributable to an identifiable intangible asset which was undervalued onthe investee's statement of financial position and which had a remaining useful life of 5 years. For theyear ended December 31, 2021, the investee reported net income of P6,000,000 and paid cashdividends of P1,000,000 on its ordinary share capital and issued 10% share dividend on December 31,2021. The entity elected to use the equity method in accounting for this investment.What is the carrying value of the investment in associate at December 31, 2021?

It is the method used to treat investments in associate companies. This method is used when an…

Answered: On July 1, 2021, Mickaella Company, an…

On July 1, 2021, Mickaella Company, an SME, acquired 20% of the outstanding ordinary shares of another entity for P5,000,000. The book value of the acquired share was P4,000,000. The excess of

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 Co. acquired all of the identifiable assets and assumed all of the liabilities of XYZ, Inc. by issuing its own ordinary shares. Information at acquisition date is shown below: Additional information: 1. ABC Co's share capital consists of 60,000 ordinary shares with par value of ₱40 per share. 2. XYZ's share capital consists of 3,000 ordinary shares with par value of ₱400 per share. A) how many shares were issued in the business combination? B) how much is the acquisition-date fair value per share?
On January 1, 2021, ABC purchased 90% of the outstanding shares of JKL Company at a cost of P1,632,000. On that date, JKL had P1,020,000 worth of outstanding shares and P1,020,000 worth of accumulated profits. For 2021, ABC Company had income of P571,200 from its own operations and paid dividends of P306,000. For 2021, JKL Company reported income of 132,600 and paid dividends of P61,200. All of the assets and liabilities of JKL have book values equal to their market values. On January 1, 2021, ABC sold equipment to JKL for P204,000. The book value of the equipment on that date was P244,800. The loss of P40,800 is reflected in the income of ABC indicated above. The equipment is expected to have a useful life of five years from the date of sale. In the December 21, 2021 consolidated statement of financial position, what will be the net income attributable to equity holders of ABC?
On January 1, 2021, ABC Co. acquired all of the identifiable assets and assumed all of the liabilities of XYZ, Inc. by issuing its own ordinary shares. Information at acquisition date is shown below: (see image below) Additional information: 1. ABC Co's share capital consists of 60,000 ordinary shares with par value of ₱40 per share. 2. XYZ's share capital consists of 3,000 ordinary shares with par value of ₱400 per share. how much is the gain on acquisition or goodwill to be recognized? what is the retained earnings of the combined entity immediately after the business combination?
On July 1, 2021, PASSETS acquired all the net assets of SIABS at its underlying book value, which resulted to neither a gain nor a goodwill. Considerations transferred included cash paid, bonds issued, and stocks issued. Apart from the transaction to acquire the net assets of and to transfer the consideration to the acquiree, PASSETS also has the following transactions: PASSETS paid P150,000 to SEC to register the newly issued shares PASSETS incurred the obligation to pay P50,000 for printing of the stock certificates of the new shares issued. PASSETS paid Mr. Louis McRasigan P100,000 cash for his professional services in administering the business combination A total of P1,000,000 for general and administrative expenses were incurred by the company, half of which was attributable to the business combination and treated as an unpaid indirect cost. a. 200,000 b. 1,300,000 c. 250,000 d. 800,000 Among the four related transactions above, how much will decrease assets of the acquirer?
On January 2, 2022, Parent Company purchased 90% of the outstanding shares of Subsidiary Company by paying P300,000. On this date, Subsidiary had Share Capital and Retained Earnings amounting to P150,000 and P230,000 respectively. Also, on this date, an equipment was undervalued by P20,000 with remaining useful life of 10 years. On the same date, Parent had P1,000,000 of Share Capital and P700,000 of Retained Earnings. The parent opted to measure the NCI using proportionate share. Parent and Subsidiary reported the following for the year ended December 31, 2022 (see image below).On July 31, 2022, Parent sold a machinery with a 5-year remaining useful life costing P1,500,000 with accumulated depreciation of P1,000,000 for P530,000 to Subsidiary. Questions:a. How much is the Consolidated Retained Earnings at December 31, 2022? b. How much is the Consolidated Net Income? .....