PROBLEM VI A condensed Statement of Financial Position at December 31, 2017 for Acquiree Company follows: Carrying Value P1,368,000 1,592,500 585,000 P3,545,500 Fair Value Current Assets, including cash of P250,000 Plant Assets P1,300,000 1,500,000 Goodwill Total Assets Current Liabilities Long-term debt Ordinary shares, par P20 Share premium Retained earnings Total Liabilities and Equity 607,500 780,000 1,000,000 500,000 657,500 P3,545,500 607,600 797,500 On January 2, 2018, Acquirer Company paid P1,500,000 cash for the net assets of the Acquiree Company (excluding cash), after which the acquiree was dissolved. This amount includes a reimbursement of the acquisition related cost paid by the Acquiree Company. A total of P147,500 out of the pocket cost was paid on this date, P57,500 of which were paid by the Acquirer Company and the reminder pertains to legal fees directly related to the business combination which was paid by the Acquiree Company. 1. What amount of goodwill is recognized by the acquirer in its financial statements? 2. How much is the increase in the assets of the surviving company as a result of the business combination?

PROBLEM VI A condensed Statement of Financial Position at December 31, 2017 for Acquiree Company follows: Carrying Value P1,368,000 1,592,500 585,000 P3,545,500 Fair Value Current Assets, including cash of P250,000 Plant Assets P1,300,000 1,500,000 Goodwill Total Assets Current Liabilities Long-term debt Ordinary shares, par P20 Share premium Retained earnings Total Liabilities and Equity 607,500 780,000 1,000,000 500,000 657,500 P3,545,500 607,600 797,500 On January 2, 2018, Acquirer Company paid P1,500,000 cash for the net assets of the Acquiree Company (excluding cash), after which the acquiree was dissolved. This amount includes a reimbursement of the acquisition related cost paid by the Acquiree Company. A total of P147,500 out of the pocket cost was paid on this date, P57,500 of which were paid by the Acquirer Company and the reminder pertains to legal fees directly related to the business combination which was paid by the Acquiree Company. 1. What amount of goodwill is recognized by the acquirer in its financial statements? 2. How much is the increase in the assets of the surviving company as a result of the business combination?

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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