On January 2, 2021 PAMIGAY CORP paid P380,000 cash and issued 120,000 new shares of its P5 par value common stock valued at P20 a share for all of SAYO CORP’s outstanding common shares in an acquisition. PAMIGAY CORP paid P15,000 for registering and issuing securities and P10,000 for other direct costs of the business combination. The fair value and book value of SAYO CORP’s identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2021 is as follows: PAMIGAY CORP SAYO CORP Cash P 1,150,000 P 120,000 Inventories 320,000 400,000 Other current assets 500,000 500,000 Land 350,000 250,000 PPE, net 2,500,000 1,400,000 Goodwill 500,000 100,000 Total Assets P 5,320,000 P 2,770,000 Accounts payable P1,000,000 P 300,000 Notes payable 1,300,000 660,000 Capital stock, P5 par 2,000,000 500,000 Additional Paid-in capital 1,000,000 100,000 Retained Earnings 20,000 1,210,000 Total Liabilities & Equities P 5,320,000 P 2,770,000 1. How much is the cash to be presented on the consolidated statement of financial position as of the date of acquisition? Group of answer choices 865,000 1,150,000 1,245,000 1,270,000 2. Based on the problem above, How much is the goodwill to be presented on the consolidated statement of financial position as of the date of acquisition? Group of answer choices 510,000 10,000 110,000 610,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 1MC

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On January 2, 2021 PAMIGAY CORP paid P380,000 cash and issued 120,000 new shares of its P5 par value common stock valued at P20 a share for all of SAYO CORP’s outstanding common shares in an acquisition. PAMIGAY CORP paid P15,000 for registering and issuing securities and P10,000 for other direct costs of the business combination. The fair value and book value of SAYO CORP’s identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2021 is as follows:

	PAMIGAY CORP	SAYO CORP
Cash	P 1,150,000	P 120,000
Inventories	320,000	400,000
Other current assets	500,000	500,000
Land	350,000	250,000
PPE, net	2,500,000	1,400,000
Goodwill	500,000	100,000
Total Assets	P 5,320,000	P 2,770,000

Accounts payable	P1,000,000	P 300,000
Notes payable	1,300,000	660,000
Capital stock, P5 par	2,000,000	500,000
Additional Paid-in capital	1,000,000	100,000
Retained Earnings	20,000	1,210,000
Total Liabilities & Equities	P 5,320,000	P 2,770,000

1. How much is the cash to be presented on the consolidated statement of financial position as of the date of acquisition?

Group of answer choices

865,000

1,150,000

1,245,000

1,270,000

2. Based on the problem above, How much is the goodwill to be presented on the consolidated statement of financial position as of the date of acquisition?

Group of answer choices

510,000

10,000

110,000

610,000

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