Shareholders of the two companies agree that a single class of shares be issued, that their contributions be measured by net assets plus allowances for goodwill, and that 10% be considered as a normal tate of return. Earnings in excess of the normal rate of return shall be capitalized at 20% in calculating goodwill. It was also agreed that authorized capital stock of the new corporation shall be 20.000 shares with a par value of P100 per share. The amount of goodwill credited to Co. A, and the total contribution of Co. B (net assets plus goodwill is a.P100,000, P400,000 b.P100,000, P600,000 c.P150,000 PS00,000 d. P200,000, P600,000
Shareholders of the two companies agree that a single class of shares be issued, that their contributions be measured by net assets plus allowances for goodwill, and that 10% be considered as a normal tate of return. Earnings in excess of the normal rate of return shall be capitalized at 20% in calculating goodwill. It was also agreed that authorized capital stock of the new corporation shall be 20.000 shares with a par value of P100 per share. The amount of goodwill credited to Co. A, and the total contribution of Co. B (net assets plus goodwill is a.P100,000, P400,000 b.P100,000, P600,000 c.P150,000 PS00,000 d. P200,000, P600,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Shareholders of the two companies agree that a single class of shares be issued, that their contributions be measured by net assets plus allowances for
The amount of goodwill credited to Co. A, and the total contribution of Co. B (net assets plus goodwill is
a.P100,000, P400,000
b.P100,000, P600,000
c.P150,000 PS00,000
d. P200,000, P600,000
Transcribed Image Text:45. Companies A and B decide to
consolidate. Asset and estimated annual
carnings contributions are as follows
Net asset contribution.
Co.A
Со.В
Total
P300,000 1400,000 P700,000
Estimated annual earnings Contribution
Co.A
Co.B
Total
50,000
80,000 130,000
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