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Prateroon's asset has a book value of P10,460,00 and a fair market value of P11,500,000 and the book value of its liabilities amounted to P3,250,000 and the fair market value of P4,000,000. On January 1, 2020 Prateroon Company purchased all the net assets of Stranemon Company consisting of: > Issuance of 20,000 unissued shares of its P10 par value ordinary share capital. As of this date, the shares of Prateroon were selling at P40 per share. > Issuance of bonds with a face value of P300,000 but are currently at 110. > A contingent payment of P200,000 cash on January 1, 2020, if the average income of Stranemon Company during the two-year period (2020-2021) exceeds P250,000 per year. Prateroon estimates that there is a 20% chance or probability that the P200,000 payment will be required. > Issuance of 5,000 additional shares on January 1, 2022 to the former shareholders of Stranemon Company if the average income cover the next two years (2020-2021) equalled or exceeded P350,000. The additional 5,000 shares expected to be issued are valued at P75,000. Professional fees of P9,000 were also paid by Prateroon to its external auditors to finalize the business combination. As of the date of acquisition, Stranemon Company reported the following book value and current market data: Вook Book Fair Fair Value Value Value 60,000 Value Cash 60,000 Accounts Payable 36,000 40,000 Inventory 120,000 180,000 Ordinary Share Capital 720,000 Buildings, net 500,000 560,000 Share Premium 164,000 Equipment, net 410,000 440,000 Retained Earnings 170,000

Prateroon's asset has a book value of P10,460,00 and a fair market value of P11,500,000 and the book value of its liabilities amounted to P3,250,000 and the fair market value of P4,000,000. On January 1, 2020 Prateroon Company purchased all the net assets of Stranemon Company consisting of: > Issuance of 20,000 unissued shares of its P10 par value ordinary share capital. As of this date, the shares of Prateroon were selling at P40 per share. > Issuance of bonds with a face value of P300,000 but are currently at 110. > A contingent payment of P200,000 cash on January 1, 2020, if the average income of Stranemon Company during the two-year period (2020-2021) exceeds P250,000 per year. Prateroon estimates that there is a 20% chance or probability that the P200,000 payment will be required. > Issuance of 5,000 additional shares on January 1, 2022 to the former shareholders of Stranemon Company if the average income cover the next two years (2020-2021) equalled or exceeded P350,000. The additional 5,000 shares expected to be issued are valued at P75,000. Professional fees of P9,000 were also paid by Prateroon to its external auditors to finalize the business combination. As of the date of acquisition, Stranemon Company reported the following book value and current market data: Вook Book Fair Fair Value Value Value 60,000 Value Cash 60,000 Accounts Payable 36,000 40,000 Inventory 120,000 180,000 Ordinary Share Capital 720,000 Buildings, net 500,000 560,000 Share Premium 164,000 Equipment, net 410,000 440,000 Retained Earnings 170,000

FINANCIAL ACCOUNTING
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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Prateroon's asset has a book value of P10,460,00 and a fair market value of P11,500,000 and the book value of its liabilities amounted to P3,250,000 and the fair market value of P4,000,000. On January 1, 2020 Prateroon Company purchased all the net assets of Stranemon Company consisting of: > Issuance of 20,000 unissued shares of its P10 par value ordinary share capital. As of this date, the shares of Prateroon were selling at P40 per share. > Issuance of bonds with a face value of P300,000 but are currently at 110. > A contingent payment of P200,000 cash on January 1, 2020, if the average income of Stranemon Company during the two-year period (2020-2021) exceeds P250,000 per year. Prateroon estimates that there is a 20% chance or probability that the P200,000 payment will be required. > Issuance of 5,000 additional shares on January 1, 2022 to the former shareholders of Stranemon Company if the average income cover the next two years (2020-2021) equalled or exceeded P350,000. The additional 5,000 shares expected to be issued are valued at P75,000. Professional fees of P9,000 were also paid by Prateroon to its external auditors to finalize the business combination. As of the date of acquisition, Stranemon Company reported the following book value and current market data: Book Book Fair Fair Value Value 36,000 720,000 164,000 Value Value 60,000 Accounts Payable 180,000 Ordinary Share Capital 560,000 Share Premium Cash 60,000 40,000 Inventory 120,000 Buildings, net 500,000 Equipment, net 410,000 440,000 Retained Earnings 170,000 Compute the Consolidated Total Liabilities on January 1, 2020.
Transcribed Image Text:Prateroon's asset has a book value of P10,460,00 and a fair market value of P11,500,000 and the book value of its liabilities amounted to P3,250,000 and the fair market value of P4,000,000. On January 1, 2020 Prateroon Company purchased all the net assets of Stranemon Company consisting of: > Issuance of 20,000 unissued shares of its P10 par value ordinary share capital. As of this date, the shares of Prateroon were selling at P40 per share. > Issuance of bonds with a face value of P300,000 but are currently at 110. > A contingent payment of P200,000 cash on January 1, 2020, if the average income of Stranemon Company during the two-year period (2020-2021) exceeds P250,000 per year. Prateroon estimates that there is a 20% chance or probability that the P200,000 payment will be required. > Issuance of 5,000 additional shares on January 1, 2022 to the former shareholders of Stranemon Company if the average income cover the next two years (2020-2021) equalled or exceeded P350,000. The additional 5,000 shares expected to be issued are valued at P75,000. Professional fees of P9,000 were also paid by Prateroon to its external auditors to finalize the business combination. As of the date of acquisition, Stranemon Company reported the following book value and current market data: Book Book Fair Fair Value Value 36,000 720,000 164,000 Value Value 60,000 Accounts Payable 180,000 Ordinary Share Capital 560,000 Share Premium Cash 60,000 40,000 Inventory 120,000 Buildings, net 500,000 Equipment, net 410,000 440,000 Retained Earnings 170,000 Compute the Consolidated Total Liabilities on January 1, 2020.
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