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ROBLEM SOLVING: INSTRUCTIONS: Answer the question/s on each supporting computations on the space provided. Separate statement of financial positions of Pill Corporation on May 31, 2022, together with current fair values of Seed's are as follows: Pill Corp. Book value Book v Cash P 55,000 P 1 Accounts receivable (net) 70,000 6 Inventories 140,000 12

ROBLEM SOLVING: INSTRUCTIONS: Answer the question/s on each supporting computations on the space provided. Separate statement of financial positions of Pill Corporation on May 31, 2022, together with current fair values of Seed's are as follows: Pill Corp. Book value Book v Cash P 55,000 P 1 Accounts receivable (net) 70,000 6 Inventories 140,000 12

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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PROBLEM SOLVING: INSTRUCTIONS: Answer the question/s on each problem. Show all supporting computations on the space provided. 11. Separate statement of financial positions of Pill Corporation and Seed Corporation on May 31, 2022, together with current fair values of Seed's identifiable net assets, are as follows: Seed Corp. Pill Corp. Book value Book value Fair value Cash P 55,000 P 1,000 P 1,000 6,000 Accounts receivable (net) 70,000 6,000 Inventories 140,000 12,000 14,000 Plant assets (net) 285,000 61,000 69,000 Goodwill 25,000 5,000 7,500 Total Assets P 575,000 P85,000 Current liabilities P 50,000 P 8,000 8,000 Long-term debt 100,000 40,000 44,000 Ordinary shares, P 1 par 150,000 10,000 Share premium 120,000 9,000 Retained earnings 155.000 18.000 Total liabilities & SHE P 575,000 P85,000 On May 31, 2022, Pill acquired 8,000 shares of Seed's outstanding stock by paying P 30,000 cash to Seed's shareholders and P 5,000 cash for legal and broker's fees relating to the business combination. a) In the consolidated statement of financial position as of May 31, 2022, 1 what amount of goodwill will be reported? b) Prepare the working paper entries needed to prepare the consolidated financial statements for Pill Corp. and its subsidiary on May 31, 2022.
Transcribed Image Text:PROBLEM SOLVING: INSTRUCTIONS: Answer the question/s on each problem. Show all supporting computations on the space provided. 11. Separate statement of financial positions of Pill Corporation and Seed Corporation on May 31, 2022, together with current fair values of Seed's identifiable net assets, are as follows: Seed Corp. Pill Corp. Book value Book value Fair value Cash P 55,000 P 1,000 P 1,000 6,000 Accounts receivable (net) 70,000 6,000 Inventories 140,000 12,000 14,000 Plant assets (net) 285,000 61,000 69,000 Goodwill 25,000 5,000 7,500 Total Assets P 575,000 P85,000 Current liabilities P 50,000 P 8,000 8,000 Long-term debt 100,000 40,000 44,000 Ordinary shares, P 1 par 150,000 10,000 Share premium 120,000 9,000 Retained earnings 155.000 18.000 Total liabilities & SHE P 575,000 P85,000 On May 31, 2022, Pill acquired 8,000 shares of Seed's outstanding stock by paying P 30,000 cash to Seed's shareholders and P 5,000 cash for legal and broker's fees relating to the business combination. a) In the consolidated statement of financial position as of May 31, 2022, 1 what amount of goodwill will be reported? b) Prepare the working paper entries needed to prepare the consolidated financial statements for Pill Corp. and its subsidiary on May 31, 2022.
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