On January 2, 2022, P Company purchased the net asset of S Company by paying P500,000 cash and issuing 100,000 shares of stocks at P3,000,000 fair market value. The par value of P's shares is P24 per share. Book value and fair value data on the Statement of Financial Positions on January 2, 2022 are as follows: P Company Book Value Fair Value Book Value Fair Value 4,600,000 4,600,000 1,000,000 1,000,000 1,500,000 1,300,000 1,800,000 1,460,000 S Company Cash Accounts Receivable 300,000 980,000 710,000 1,520,000 1,064,000 90,000 3,600,000 3,024,000 300,000 980,000 600,000 Inventory PPE, net Goodwill 80,000 Total 8,900,000 8,360,000 570,000 Liabilities Share Capital Share Premium Retained Earnings 1,000,000 1,600,000 900,000 5,400,000 8,900,000 570,000 600,000 960,000 1,470,000 3,600,000 d1,000,000 Total P incurred and paid legal and brokerage fees of P50,000 for business combination; share issue costs of P30,000 and P20,000 indirect acquisition costs. It is determinable that contingency fee of P150,000 (estimated fair value) would be paid within the year.
On January 2, 2022, P Company purchased the net asset of S Company by paying P500,000 cash and issuing 100,000 shares of stocks at P3,000,000 fair market value. The par value of P's shares is P24 per share. Book value and fair value data on the Statement of Financial Positions on January 2, 2022 are as follows: P Company Book Value Fair Value Book Value Fair Value 4,600,000 4,600,000 1,000,000 1,000,000 1,500,000 1,300,000 1,800,000 1,460,000 S Company Cash Accounts Receivable 300,000 980,000 710,000 1,520,000 1,064,000 90,000 3,600,000 3,024,000 300,000 980,000 600,000 Inventory PPE, net Goodwill 80,000 Total 8,900,000 8,360,000 570,000 Liabilities Share Capital Share Premium Retained Earnings 1,000,000 1,600,000 900,000 5,400,000 8,900,000 570,000 600,000 960,000 1,470,000 3,600,000 d1,000,000 Total P incurred and paid legal and brokerage fees of P50,000 for business combination; share issue costs of P30,000 and P20,000 indirect acquisition costs. It is determinable that contingency fee of P150,000 (estimated fair value) would be paid within the year.
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 28E
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Question
Determine:
1. Amount of consideration
2. Amount of
3. Assuming that P Company is an SME, how much is the goodwill or gain?
Transcribed Image Text:On January 2, 2022, P Company purchased the net asset of S Company by
paying P500,000 cash and issuing 100,000 shares of stocks at P3,000,000
fair market value. The par value of P's shares is P24 per share. Book value
and fair value data on the Statement of Financial Positions on January 2,
2022 are as follows:
P Company
Book Value Fair Value
S Company
Book Value Fair Value
Cash
Accounts Receivable
300,000
980,000
600,000
4,600,000
300,000
980,000
710,000
1,520,000 1,064,000
90,000
3,600,000 3,024,000
4,600,000
1,000,000
1,500,000 1,300,000
1,800,000
1,000,000
Inventory
PPE, net
Goodwill
1,460,000
80,000
Total
8,900,000 8,360,000
570,000
Liabilities
Share Capital
Share Premium
Retained Earnings
570,000
600,000
960,000
1,470,000
3,600,000
1,000,000
1,000,000
1,600,000
900,000
5,400,000
8,900,000
Total
P incurred and paid legal and brokerage fees of P50,000 for business
combination; share issue costs of P30,000 and P20,000 indirect acquisition
costs. It is determinable that contingency fee of P150,000 (estimated fair
value) would be paid within the year.
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