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S and ABC Corporation entered into a Deed of Sale of Shares of Stocks for the acquisition of S of 1,000 of the unissued shares of the latter at P100 par value per share. S was to give a down payment of 50% with the balance to be paid after 30 days. What kind of contract was entered between S and ABC Corporation?
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- On January 1, 2031, PNB and Allied Bank entered into a contract of merger wherein PNB will issue 100,000 ordinary shares with par value of P10 and quoted price of P20 to the existing shareholders of Allied in exchange for the net assets of Allied Bank. Aside from that, PNB is required to pay the stockholders of Allied Bank of cash amounting to P891,000 on December 31, 2031. The effective interest rate of this contingent consideration is 10%. PNB paid acquisition related cost of business combination amounting to P100,000, indirect cost of P50,000 and stock issuance cost amounting to P200,000. As of December 31, 2030, PNB has total assets with book value of P50M and fair market value of P60M while Allied Bank has total assets with book value of P5M and fair market value of P4M. As of December 31, 2030, Allied Bank has total liabilities with book value of P2.4M with fair value of P2.5M. A contingent liability of Allied Bank on December 31, 2030 amounting to P300,000 has been…On January 1, 20x1, an entity has an outstanding note payable with carrying amount of P1,000,000. On this date, the debtor agrees to receive 10,000 shares of theentity with par value per share of P10 in full settlement of the note payable. The shares are currently selling at P75 per share. Requirements: a. Compute for the gain or loss on the derecognition of the note payable. b. Provide the entry to record the derecognition of the note payable.On January 1, 20x1, Entity A acquires 100% interest in entity B in exchange for Entity A’s 10,000 shares with par value per share of P20 and fair value of P200 per share. Entity B’s net identifiable assets have a fair value of P1,900,000. In addition, entity A agrees to issue additional 2,000 shares if entity B’s 20x1 profit will exceed P3,600,000. The fair value of the contingent consideration is P280,000. Requirements: How much is the goodwill recognized on acquisition date? Entity B's 20x1 profit is P3,800,000. Entity A issues the additional shares on January 14, 20x2. Provide the journal entries. Entity B's 20x1 profit is P2,800,000. Provide the journal entries.
- On January 1, 20x1, John Corp. acquired the identifiable net assets of Jose Corp. by paying cash of ₱1,500,000 and issuing 10,000 ordinary shares with par and fair value of ₱100 and ₱120 per share, respectively. The identifiable assets of Jose had book values of ₱3,200,000 and fair values of ₱4,000,000 and its liabilities have book values equal to its fair values amounting to ₱1,500,000. As per agreement, John Corp. agreed to pay additional amount equal to 20% of the 20x1 year-end profit that exceeds ₱500,000 on January 2, 20x2. On the date of acquisition Jon estimated that the fair value of contingent consideration is ₱15,000. Assume the actual profit of ABC on December 31, 20x1 is ₱600,000. What is the gain (loss) on extinguishment of contingent consideration liability.XYZ Company merged into UUU Company on July 1, 2021. In exchange for the netassets at fair market value of XYZ Company amounting to P696,450, UUU, issued68,000 ordinary shares at P9 par value with a market price of P12 per share. Outof-pockets of the combination were as follows: Legal fees for the contract ofbusiness combination P35,600; Audit fee for SEC registration of stock issueP90,000; Printing costs of stock certificates P14,500; Broker’s fee P23,600;Accountant’s fee for pre-acquisition P80,000; Other indirect cost of acquisitionP75,000; General and allocated expenses P43,000 and Listing fees in issuingnew shares P36,000. XYZ will pay an additional cash consideration of P455,000in the event that UUU’s net income will be equal or greater than P950,000 for theperiod ended December 31, 2021. At acquisition date, there is a high probabilityof reaching the target net income and the fair value of the additionalconsideration was determined to be P195,000. Actual net income for the…A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. Received stock rights permitting the purchase of one share at P70 for every five shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised all rights from the stock purchased March 20 before receiving 25% stock dividends on November 30. However, your client has received 300 preference shares instead of ordinary which your client agreed on. On this date, the market value of XYZ’s ordinary shares is P80 while P40 for its preference shares. The amount of investment in XYZ’s preference shares will be (round off % to 2 decimal places as well as your final answer and rights are accounted for separately.).
- A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. Received stock rights permitting the purchase of one share at P60 for every four shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised all rights from the stock purchased March 20 before receiving 50% stock dividends on November 30. If on December 25, the BOD of XYZ declared P200 dividends per share, how much dividend your client is entitled to received on the date of payment? Rights are accounted for separately.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…
