25Petron Company issued 5 shares in exchange for each ordinary share of Shell Company (alloutstanding shares) on January 2, 2022. The fair value of Petron's shares on that date was P60while the fair value of Shell's shares was P200. The statement of financial position of bothcompanies before the combination were (see image below).On the same date, the fair value of Petran's identifiable assets and liabilities assumed wasP5,800 and P2,100 respectively while the fair value of Shell's net assets was the same as thecarrying value.How much is the amount of consideration? APetronShellAssets5,50011,50011,500Total5,500Liabilities2,1009005,100Share Capital - 100 sharesShare Capital –- 60 sharesRetained Earnings1,8004,60011,5002,500Total5,500

A business combination is defined as a transaction an event in which an acquirer (an investor…

Petron Company issued 5 shares in exchange for each ordinary share of Shell Company (all outstanding shares) on January 2, 2022. The fair value of Petron's shares on that date was P60 while the fair value of Shell's shares was P200. The statement of financial position of both companies before the combination were (see image below). On the same date, the fair value of Petron's identifiable assets and liabilities assumed was P5,800 and P2,100 respectively while the fair value of Shell's net assets was the same as the carrying value. How much is the amount of consideration?" Petron Shell Assets 5,500 5,500 11,500 11,500 Total 2,100 900 Liabilities Share Capital - 100 shares Share Capital - 60 shares Retained Earnings 5,100 2,500 5,500 1,800 4,600 11,500 Total

Petron Company issued 5 shares in exchange for each ordinary share of Shell Company (all outstanding shares) on January 2, 2022. The fair value of Petron's shares on that date was P60 while the fair value of Shell's shares was P200. The statement of financial position of both companies before the combination were (see image below). On the same date, the fair value of Petron's identifiable assets and liabilities assumed was P5,800 and P2,100 respectively while the fair value of Shell's net assets was the same as the carrying value. How much is the amount of consideration?" Petron Shell Assets 5,500 5,500 11,500 11,500 Total 2,100 900 Liabilities Share Capital - 100 shares Share Capital - 60 shares Retained Earnings 5,100 2,500 5,500 1,800 4,600 11,500 Total

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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Question

25
Petron Company issued 5 shares in exchange for each ordinary share of Shell Company (all
outstanding shares) on January 2, 2022. The fair value of Petron's shares on that date was P60
while the fair value of Shell's shares was P200. The statement of financial position of both
companies before the combination were (see image below).
On the same date, the fair value of Petran's identifiable assets and liabilities assumed was
P5,800 and P2,100 respectively while the fair value of Shell's net assets was the same as the
carrying value.
How much is the amount of consideration? A
Petron
Shell
Assets
5,500
11,500
11,500
Total
5,500
Liabilities
2,100
900
5,100
Share Capital - 100 shares
Share Capital –- 60 shares
Retained Earnings
1,800
4,600
11,500
2,500
Total
5,500

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