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The following are the balances of BIG Company and GIRL Company as of January 1, 20x1. Fair Fair Вook Value Вook BIG COMPANY Market Market Value Value Value ASSE TS LIABILITY AND EQUITY Cash 105,000 105,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 330,000 Accounts Receivable 550,000 1,300,000 1,320,000 Inventory Property, Plant and Equipment, net 220,000 2,000,000 4,790,000 4,500,000 Share Premium 775,000 ? Goodwill 100,000 100,000 Retained Earnings 1,390,000 ? Fair Вook Fair Market Book GIRL COMPANY Market Value Value Value Value Cash 300,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 550,000 500,000 Accounts Receivable 600,000 2,500,000 2,480,000 Inventory Property, Plant and Equipment, net 350,000 3,000,000 8,910,000 10,000,000 Share Premium 150,000 2,760,000 ? Goodwill 100,000 Retained Earnings 1,500,000 ? The companies combined their resources and formed BIGGEST Co. Research and development with a fair market value of P120,000 was not included in the books of Big Company. An unrecorded interest payable worth P20,000 was also not included in the books of Girl Company. The new company issues 16,000 shares of 500 par value common stocks with fair value of P550 and pays additional 1,500,000 and incurs a mortgage loan of P1,000,000. The company also paid a direct costs of 50,000 and indirect cost of 20,000. P15,000 direct cost and P5,000 stock issue cost remain unpaid. Chan Co. also pay BIG and GIRL additional P100,000 net income after 1 year if its net income exceed P3,000,000, there is a 90% chance of meeting the target income. Determine the total EQUITY of BIGGEST CO. immediately after the business combination.

The following are the balances of BIG Company and GIRL Company as of January 1, 20x1. Fair Fair Вook Value Вook BIG COMPANY Market Market Value Value Value ASSE TS LIABILITY AND EQUITY Cash 105,000 105,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 330,000 Accounts Receivable 550,000 1,300,000 1,320,000 Inventory Property, Plant and Equipment, net 220,000 2,000,000 4,790,000 4,500,000 Share Premium 775,000 ? Goodwill 100,000 100,000 Retained Earnings 1,390,000 ? Fair Вook Fair Market Book GIRL COMPANY Market Value Value Value Value Cash 300,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 550,000 500,000 Accounts Receivable 600,000 2,500,000 2,480,000 Inventory Property, Plant and Equipment, net 350,000 3,000,000 8,910,000 10,000,000 Share Premium 150,000 2,760,000 ? Goodwill 100,000 Retained Earnings 1,500,000 ? The companies combined their resources and formed BIGGEST Co. Research and development with a fair market value of P120,000 was not included in the books of Big Company. An unrecorded interest payable worth P20,000 was also not included in the books of Girl Company. The new company issues 16,000 shares of 500 par value common stocks with fair value of P550 and pays additional 1,500,000 and incurs a mortgage loan of P1,000,000. The company also paid a direct costs of 50,000 and indirect cost of 20,000. P15,000 direct cost and P5,000 stock issue cost remain unpaid. Chan Co. also pay BIG and GIRL additional P100,000 net income after 1 year if its net income exceed P3,000,000, there is a 90% chance of meeting the target income. Determine the total EQUITY of BIGGEST CO. immediately after the business combination.

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 10MCQ
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The following are the balances of BIG Company and GIRL Company as of January 1, 20x1. Fair Fair Вook Value Вook BIG COMPANY Market Market Value Value Value ASSE TS LIABILITY AND EQUITY Cash 105,000 105,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 330,000 Accounts Receivable 550,000 1,300,000 1,320,000 Inventory Property, Plant and Equipment, net 220,000 2,000,000 4,790,000 4,500,000 Share Premium 775,000 ? Goodwill 100,000 100,000 Retained Earnings 1,390,000 ? Fair Вook Fair Market Book GIRL COMPANY Market Value Value Value Value Cash 300,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 550,000 500,000 Accounts Receivable 600,000 2,500,000 2,480,000 Inventory Property, Plant and Equipment, net 350,000 3,000,000 8,910,000 10,000,000 Share Premium 150,000 2,760,000 ? Goodwill 100,000 Retained Earnings 1,500,000 ? The companies combined their resources and formed BIGGEST Co. Research and development with a fair market value of P120,000 was not included in the books of Big Company. An unrecorded interest payable worth P20,000 was also not included in the books of Girl Company. The new company issues 16,000 shares of 500 par value common stocks with fair value of P550 and pays additional 1,500,000 and incurs a mortgage loan of P1,000,000. The company also paid a direct costs of 50,000 and indirect cost of 20,000. P15,000 direct cost and P5,000 stock issue cost remain unpaid. Chan Co. also pay BIG and GIRL additional P100,000 net income after 1 year if its net income exceed P3,000,000, there is a 90% chance of meeting the target income. Determine the total EQUITY of BIGGEST CO. immediately after the business combination.
Transcribed Image Text:The following are the balances of BIG Company and GIRL Company as of January 1, 20x1. Fair Fair Вook Value Вook BIG COMPANY Market Market Value Value Value ASSE TS LIABILITY AND EQUITY Cash 105,000 105,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 330,000 Accounts Receivable 550,000 1,300,000 1,320,000 Inventory Property, Plant and Equipment, net 220,000 2,000,000 4,790,000 4,500,000 Share Premium 775,000 ? Goodwill 100,000 100,000 Retained Earnings 1,390,000 ? Fair Вook Fair Market Book GIRL COMPANY Market Value Value Value Value Cash 300,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 550,000 500,000 Accounts Receivable 600,000 2,500,000 2,480,000 Inventory Property, Plant and Equipment, net 350,000 3,000,000 8,910,000 10,000,000 Share Premium 150,000 2,760,000 ? Goodwill 100,000 Retained Earnings 1,500,000 ? The companies combined their resources and formed BIGGEST Co. Research and development with a fair market value of P120,000 was not included in the books of Big Company. An unrecorded interest payable worth P20,000 was also not included in the books of Girl Company. The new company issues 16,000 shares of 500 par value common stocks with fair value of P550 and pays additional 1,500,000 and incurs a mortgage loan of P1,000,000. The company also paid a direct costs of 50,000 and indirect cost of 20,000. P15,000 direct cost and P5,000 stock issue cost remain unpaid. Chan Co. also pay BIG and GIRL additional P100,000 net income after 1 year if its net income exceed P3,000,000, there is a 90% chance of meeting the target income. Determine the total EQUITY of BIGGEST CO. immediately after the business combination.
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