9,714,90 ABC Corp. (qualify as SME) issued 120,000 shares of P25par ordinary share for all outstanding shares of XYZ in a business combination consummated on January 1, 2022. ABC's ordinary share was selling at P40 per share at the time of the consummation of the combination. XYZ's net asset is P4.2 million at book value (fair value 4.439M). The difference is due to inventory with fair value higher by P59,000 than its book value and the balance is to equipment with remaining useful life of 6 years. Out of pocket expenses of the combination were as follows: Legal Fees: For business combination For SEC registration SEC registration costs Printing costs of share certificates Finder's fee CPA audit fee for SEC registration 2314002 12,000 14,500 18,200 9,400 27,000 19,000 Net income reported by ABC and XYZ for 2022 is P1,200,000 and P500,000, respectively. The Share Capital and Retained Earnings of ABC is P1,500,000 and P700,000, respectively. How much is the consolidated net income for 2022?

9,714,90 ABC Corp. (qualify as SME) issued 120,000 shares of P25par ordinary share for all outstanding shares of XYZ in a business combination consummated on January 1, 2022. ABC's ordinary share was selling at P40 per share at the time of the consummation of the combination. XYZ's net asset is P4.2 million at book value (fair value 4.439M). The difference is due to inventory with fair value higher by P59,000 than its book value and the balance is to equipment with remaining useful life of 6 years. Out of pocket expenses of the combination were as follows: Legal Fees: For business combination For SEC registration SEC registration costs Printing costs of share certificates Finder's fee CPA audit fee for SEC registration 2314002 12,000 14,500 18,200 9,400 27,000 19,000 Net income reported by ABC and XYZ for 2022 is P1,200,000 and P500,000, respectively. The Share Capital and Retained Earnings of ABC is P1,500,000 and P700,000, respectively. How much is the consolidated net income for 2022?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter19: Corporations: Distributions Not In Complete Liquidation

Section: Chapter Questions

Problem 54P

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P Company, an SME, issued 120,000 shares of P25 par value ordinary shares for all the outstanding stock of S Company in business consummated on July 1, 2022. P Company’s ordinary shares were selling at P40 per share at the time of consummation of the combination. The book value of S net assets was P3.8M. out of pocket costs of combination were as follows:(1) Legal fees for business combination - P12,000(2) Legal fees for SEC registration - 14,500(3) SEC registration costs - 18,200(4) Printing costs of share certificates - 9,400(5) Finder's fees - 27,000(6) CPA audit fees for SEC registration in #3 - 19,000How much is the capitalized cost of investment?
Parent Company, an SME issued 60,000 shares of P100 par value ordinary shares for all the outstanding stock of Sub Company in business combination consummated on January 2, 2022. Parent's ordinary shares were selling at P160/sh at the time of acquisition. The book value of Sub's net assets was P7,600,000. Out of pocket costs of combination were as follows: Legal fees for business combination, P24,000; printing cost for stock certificate, P18,800; finder's fee, P54,000; and CPA audit fee for business combination, P38,000. A contingent consideration that is probable and can be reasonably estimated amounted to P36,400.The total amount to be capitalized as cost of investment in Sub Company is: 9,636,400 9,752,400 9,600,000 9,716,000
Parent Company, an SME issued 60,000 shares of P100 par value ordinary shares for all the outstanding stock of Sub Company in business combination consummated on January 2, 2022. Parent's ordinary shares were selling at P160/sh at the time of acquisition. The book value of Sub's net assets was P7,600,000. Out of pocket costs of combination were as follows: Legal fees for business combination, P24,000; printing cost for stock certificate, P18,800; finder's fee, P54,000; and CPA audit fee for business combination, P38,000. A contingent consideration that is probable and can be reasonably estimated amounted to P36,400.The total amount to be capitalized as cost of investment in Sub Company is: A. 9,752,400 B. 9,600,000 C. 9,636,400 D. 9,716,000
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