What is the total amount of consideration paid that should be capitalized by Patrick Corp.?
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On January 1, 20x1, Patrick Corp. acquired the identifiable net assets of Jinky Corp. by paying cash of P1,500,000; issuing 50,000 ordinary shares with a market value of P60 per share. Patrick paid the broker’s fee of P25,000; cost if SEC registration of shares issued amounting to P2,000 and indirect cost of P5,000. The book values of assets of Patrick and Jinky are P15,200,000 and P2,500,000, respectively, and the book values of liability of Patrick and Jinky are P4,000,000 and P800,000.
The book value reflects fair value of assets and liabilities except that the current asset of Patrick is overvalued by P200,000 and non-current asset of Jinky Corp is undervalued by P500,000.
Patrick Corp. has estimated P400,000 representing cost of exiting the activity of Jinky Corp such as: cost of terminating employees and the cost of relocating terminated employees of Jinky.
The agreement also provides that Patrick Corp shall pay cash on January 10, 20x1, equal 120% of the amount by which December 31, 20x1, earnings of Patrick Corp exceeds P600,000. As of the date of acquisition, the estimated amount
The actual earnings of Patrick for year 20x1 is P800,000.
What is the total amount of consideration paid that should be capitalized by Patrick Corp.?
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- On January 1, 20x1, Patrick Corp. acquired the identifiable net assets of Jinky Corp. by paying cash of P1,500,000; issuing 50,000 ordinary shares with a market value of P60 per share. Patrick paid the broker’s fee of P25,000; cost if SEC registration of shares issued amounting to P2,000 and indirect cost of P5,000. The book values of assets of Patrick and Jinky are P15,200,000 and P2,500,000, respectively, and the book values of liability of Patrick and Jinky are P4,000,000 and P800,000. The book value reflects fair value of assets and liabilities except that the current asset of Patrick is overvalued by P200,000 and non-current asset of Jinky Corp is undervalued by P500,000. Patrick Corp. has estimated P400,000 representing cost of exiting the activity of Jinky Corp such as: cost of terminating employees and the cost of relocating terminated employees of Jinky. The agreement also provides that Patrick Corp shall pay cash on January 10, 20x1, equal 120% of the amount by which…On January 1, 20x1, Patrick Corp. acquired the identifiable net assets of Jinky Corp. by paying cash of P1,500,000; issuing 50,000 ordinary shares with a market value of P60 per share. Patrick paid the broker’s fee of P25,000; cost if SEC registration of shares issued amounting to P2,000 and indirect cost of P5,000. The book values of assets of Patrick and Jinky are P15,200,000 and P2,500,000, respectively, and the book values of liability of Patrick and Jinky are P4,000,000 and P800,000. The book value reflects fair value of assets and liabilities except that the current asset of Patrick is overvalued by P200,000 and non-current asset of Jinky Corp is undervalued by P500,000. Patrick Corp. has estimated P400,000 representing cost of exiting the activity of Jinky Corp such as: cost of terminating employees and the cost of relocating terminated employees of Jinky. The agreement also provides that Patrick Corp shall pay cash on January 10, 20x1, equal 120% of the amount by which…January 1, 20x1, Peter Corp. acquired the identifiable net assets of Ella Corp. by paying cash of P1,500,000; issuing 50,000 ordinary shares with a market value of P60 per share. Peter paid the broker's fee of P25,000; cost if SEC registration of shares issued amounting to P2,000 and indirect cost of P5,000. The book values of assets of Peter and Ella are P15,200,000 and P2,500,000, respectively, and the book values of liability of Peter and Ella are P4,000,000 and P800,000. The book value reflects fair value of assets and liabilities except that the current asset of Peter is overvalued by P200,000 and non-current asset of Ella Corp is undervalued by P500,000. Peter Corp. has estimated P400,000 representing cost of exiting the activity of Ella Corp such as: cost of terminating employees and the cost of relocating terminated employees of Ella. The agreement also provides that Peter Corp shall pay cash on January 10, 20x1, equal 120% of the amount by which December 31, 20x1, earnings of…
- The following investment-related transactions were completed by the company during 2021: Purchased P3,000,000.00 of ABC Corporation 7% bonds, paying 102.5 plus accrued interest of P52,500.00. In addition, the company paid brokerage fee of P15,000.00. The company classified these bonds as a trading security. • Purchased 30,000 shares of XYZ Corporation ordinary shares at P125 per share plus brokerage fees of P28,500. The company classified this stock as available for sale. Received semi-annual interest on the ABC Corporation bonds. Sold 4,500 shares of XYZ Corporation at P132 per share. Sold P480,000 of ABC Corporation 7% bonds at 102, plus accrued interest of P2,790.00. Determine the current portion of the investments.JJJ Co. was incorporated on January 1, 20x1. The following were the transactions during the year: Total consideration from share issuances amounted to P2,000,000. · A land and building were acquired through a lump sum payment of P400,000. A mortgage amounting to P100,000 was assumed on the land and building. Total payments of P80,000 were made during the year on the %. mortgage assumed on the land and building, The payments are inclusive of interest amounting to P10,000. · Additional capital of P200,000 was obtained through bank loans. None of the bank loans were paid during the year. Half of the bank loans required a secondary mortgage on the land and building. There is no accrued interest as of year-end. Dividends declared during the year but remained unpaid amounted to P60,000. • No other transactions during the year affected liabilities. • Retained earnings as of December 31, 20x1 is P120,000. How much is the profit for the year?On January 1, 20x4, the Alpha Company entered into a transaction for acquisition of assets and liabilities of Beta Company. Alpha issued P400 in long-term liabilities and 40 shares of ordinary shares having a par value of P1 per share but a fair value of P10 per share. Alpha paid P20 to lawyers, accountants and brokers for assistance in bringing about this purchase. Another P15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Item.. ..Alpha .Beta Cash.. P 180 ..P 40 Accounts Receivable...... 810..180 Inventory... 1,080.. 280 Land. . 600.. 360 Buildings (net).. .1,260.. 440 Equipment (net).. 480... 100 .....- Accounts Payable........( 450)..( 80) Long-term liabilities......(1,290)..( 400) Ordinary Shares, P1 par....( 330) Ordinary Shares, P20 par .( 240) Share Premium.. ( 1,080)..( 340) Retained Earnings.......(1,260).. ( 340) Note: Parentheses indicate a credit balance.
- Taylor Company acquired the assets and assumed the liabilities of Swift Inc. on June 30, 2022. The consideration transferred by the acquirer were as follows: Cash amounting to P2,000,000. Issued 10,000 ordinary shares at P10 par with a market price of Issued 5 year interest bearing bonds payable with a face value of P3,000,000 with a nominal rate of 10% and effective interest of 12%. (use two decimal places for the present value factor) Acquisition related costs incurred were as follows: Legal fees amounting to P120,000, 70% of which is not yet Share issue costs paid amounted to P15,000. Bond Issue costs paid amounting to P120,000. The Balance Sheet of the two entities before acquisition were as follows: Taylor Company Swift Inc. Total Assets 16,500,000 5,235,000 Total Liabilities 2,500,000 500,000 Ordinary Shares 5,000,000 1,250,000 Share premium 1,500,000 750,000 Retained Earnings 6/30/22 7,500,000 2,735,000 It was…Peace Company issued common shares with a par value of $58,000 and a market value of $165,300 in exchange for 30 percent ownership of Symbol Corporation on January 1, 20X2. Symbol reported the following balances on that date: Assets Cash Accounts Receivable Inventory (FIFO basis) Land Buildings & Equipment Less: Accumulated Depreciation Patent Total Assets Liabilities & Equities Accounts Payable SYMBOL CORPORATION Balance Sheet January 1, 20X2 Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities Book Value Fair Value $ 57,000 $ 57,000 97,000 97,000 133,000 163,000 55,000 70,000 505,000 326,000 (245,000) Investment income (loss) Balance in the investment account $ 602,000 $ 22,000 172,000 148,000 12,000 248,000 $ 602,000 32,000 $ 745,000 $ 22,000 172,000 The estimated economic life of the patents held by Symbol is 10 years. The buildings and equipment are expected to last 12 more years on average. Symbol paid dividends of $18,000 during…Ed Company acquired the assets and assumed the liabilities of Sheeran Inc. on June 30, 2022. The consideration transferred by the acquirer were as follows: Cash amounting to P2,000,000.Issued 10,000 ordinary shares at P10 par with a market price of P15.Issued 5 year interest bearing bonds payable with a face value of P3,000,000 with a nominal rate of 10% and effective interest of 12%. (use two decimal places for the present value factor) Acquisition related costs incurred were as follows: Legal fees amounting to P120,000, 70% of which is not yet paid.Share issue costs paid amounted to P15,000.Bond Issue costs paid amounting to P120,000. The Balance Sheet of the two entities before acquisition were as follows: Taylor Company Swift Inc. Total Assets 16,500,000 5,235,000 Total Liabilities 2,500,000 500,000 Ordinary Shares 5,000,000 1,250,000 Share premium 1,500,000 750,000 Retained Earnings 6/30/22 7,500,000 2,735,000 It…
- Ed Company acquired the assets and assumed the liabilities of Sheeran Inc. on June 30, 2022. The consideration transferred by the acquirer were as follows: Cash amounting to P2,000,000. Issued 10,000 ordinary shares at P10 par with a market price of P15. Issued 5 year interest bearing bonds payable with a face value of P3,000,000 with a nominal rate of 10% and effective interest of 12%. (use two decimal places for the present value factor) Acquisition related costs incurred were as follows: Legal fees amounting to P120,000, 70% of which is not yet paid. Share issue costs paid amounted to P15,000. Bond Issue costs paid amounting to P120,000. The Balance Sheet of the two entities before acquisition were as follows: Ed Company Sheeran Inc. Total Assets 16,500,000 5,235,000 Total Liabilities 2,500,000 500,000 Ordinary Shares 5,000,000 1,250,000 Share premium 1,500,000 750,000 Retained Earnings 6/30/22 7,500,000 2,735,000…Chowking Company engaged in the following investment transactions during the current year: February 1 Purchased 5,000 ordinary shares of ZZZ Company for P200 per share plus a brokerage commission of P50,000. These shares are classified as trading securities. June 25 Received P120 per share dividend on ZZZ Company shares. October 1 Purchased 20,000 shares of XXX Company for P150 per share plus brokerage fee of P100,000. These shares are designated at FVOCI. December 31 Received P50 per share dividend on XXX Company shares. 31 ZZZ Company shares are selling for P250 and XXX shares are selling for P180. What net amount of income should be reported for the current year?A
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