Petron Company issued 80,000 new shares of its P5 par value ordinary shares valued at P12 per share in exchange for 100,000 outstanding shares (P2 par value) of Shell Company on March 31, 2021. The fair value and book value of Shell's identifiable assets and liabilities were the same except Inventory which was overstated by P50,000 and Equipment which was understated by P100,000. The financial statements of Petron and Shell were (see image below). Petron also agreed to pay P500,000 one year after the acquisition date if the net income of Shell will exceed P10,000,000. The fair value of the contingent consideration is P300,000. Petron incurred the following costs: Finder's Fee - 20,000; Professional Fee - 60,000; Other Indirect Cost 10,000 and Printing and Registration of Shares - 5,000. How much is the goodwill/gain on bargain purchase if NCI is measured using proportionate share? Cash Accounts Receivable Inventory Equipment Total Accounts Payable Share Capital Share Premium Retained Earnings Total Petron 75,000 160,000 200,000 1,675,000 2,110,000 800,000 600,000 450,000 260,000 2,110,000 Shell 60,000 200,000 250,000 875,000 1,385,000 485,000 250,000 50,000 600,000 1,385,000

Petron Company issued 80,000 new shares of its P5 par value ordinary shares valued at P12 per share in exchange for 100,000 outstanding shares (P2 par value) of Shell Company on March 31, 2021. The fair value and book value of Shell's identifiable assets and liabilities were the same except Inventory which was overstated by P50,000 and Equipment which was understated by P100,000. The financial statements of Petron and Shell were (see image below). Petron also agreed to pay P500,000 one year after the acquisition date if the net income of Shell will exceed P10,000,000. The fair value of the contingent consideration is P300,000. Petron incurred the following costs: Finder's Fee - 20,000; Professional Fee - 60,000; Other Indirect Cost 10,000 and Printing and Registration of Shares - 5,000. How much is the goodwill/gain on bargain purchase if NCI is measured using proportionate share? Cash Accounts Receivable Inventory Equipment Total Accounts Payable Share Capital Share Premium Retained Earnings Total Petron 75,000 160,000 200,000 1,675,000 2,110,000 800,000 600,000 450,000 260,000 2,110,000 Shell 60,000 200,000 250,000 875,000 1,385,000 485,000 250,000 50,000 600,000 1,385,000

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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