PROBLEM X Red Corporation will issue common shares with a par value of P10 for the net assets of Blue Company. Red's Common stock has a current market value of P40 per share. Blue's statement of financial position on the date of acquisition follow: Current assets P320,000 Common stock, P5 par P80,000 Property and Equipment 880,000 Additional paid in capital 320,000 Liabilities 400,000 Retained Earnings 400,000 Blue's current assets are appraised at P400,000 and the property and equipment was also appraised at P1,600,000. Its liabilities are fairly value. Accordingly, Red Corporation issued shares of its common stock with a total market value equal to that of Blue's net assets including goodwill. 1. To recognize goodwill of P200,000, how many shares were to be issued?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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PROBLEM X
Red Corporation will issue common shares with a par value of P10 for the net assets of Blue Company. Red's Common stock has a current
market value of P40 per share. Blue's statement of financial position on the date of acquisition follow:
Current assets
P320,000
Common stock, P5 par
P80,000
Property and Equipment
880,000
Additional paid in capital
320,000
Liabilities
400,000
Retained Earnings
400,000
Blue's current assets are appraised at P400,000 and the property and equipment was also appraised at P1,600,000. Its liabilities are fairly
value. Accordingly, Red Corporation issued shares of its common stock with a total market value equal to that of Blue's net assets
including goodwill.
1. To recognize goodwill of P200,000, how many shares were to be issued?
Transcribed Image Text:PROBLEM X Red Corporation will issue common shares with a par value of P10 for the net assets of Blue Company. Red's Common stock has a current market value of P40 per share. Blue's statement of financial position on the date of acquisition follow: Current assets P320,000 Common stock, P5 par P80,000 Property and Equipment 880,000 Additional paid in capital 320,000 Liabilities 400,000 Retained Earnings 400,000 Blue's current assets are appraised at P400,000 and the property and equipment was also appraised at P1,600,000. Its liabilities are fairly value. Accordingly, Red Corporation issued shares of its common stock with a total market value equal to that of Blue's net assets including goodwill. 1. To recognize goodwill of P200,000, how many shares were to be issued?
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