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Donut Inc. issued 20,000 common shares in exchange for all the outstanding shares of Munchkin Inc.  On acquisition date, Munchkin Inc.’s net identifiable assets have carrying amount of P4,000,000 and fair value of P2,000,000.  The transaction increased Donut Inc.’s share premium by P400,000; however, no goodwill resulted from the business combination.  How much is the acquisition-date fair value per share of the common shares issued by Donut Inc.?* a. P 100 b. P 20 c. P 40 d. P 80

Donut Inc. issued 20,000 common shares in exchange for all the outstanding shares of Munchkin Inc.  On acquisition date, Munchkin Inc.’s net identifiable assets have carrying amount of P4,000,000 and fair value of P2,000,000.  The transaction increased Donut Inc.’s share premium by P400,000; however, no goodwill resulted from the business combination.  How much is the acquisition-date fair value per share of the common shares issued by Donut Inc.?* a. P 100 b. P 20 c. P 40 d. P 80

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 30E
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Donut Inc. issued 20,000 common shares in exchange for all the outstanding shares of Munchkin Inc.  On acquisition date, Munchkin Inc.’s net identifiable assets have carrying amount of P4,000,000 and fair value of P2,000,000.  The transaction increased Donut Inc.’s share premium by P400,000; however, no goodwill resulted from the business combination.  How much is the acquisition-date fair value per share of the common shares issued by Donut Inc.?*

a. P 100

b. P 20

c. P 40

d. P 80

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