P Corporation, a publicly-listed company, acquired S Company, a privately-owned company, on September 30, 20X1. Given below are their statement of financial position (SFP) as of the date of acquisition: P Corporation Statement of Financial Position September 30, 20X1 Current Assets Non-Current Assets P500 1,300 Current Liabilities Non-Current Liabilities Common Stock, 100 Shares Additional Paid-In Capital Retained Earnings Total Liabilities and Equity 300 400 100 200 800 P1,800 Total Assets P1,800 S Company Statement of Financial Position September 30, 20x1 Current Assets Non-Current Assets P700 3,000 Current Liabilities Non-Current Liabilities Common Stock, 60 Shares Additional Paid-In Capital Retained Earnings Total Liabilities and Equity P600 1,100 60 540 1,400 P3.700 Total Assets P3,700 Additional information about the acquisition are as follows: P Corporation issues 2.5 shares in exchange for each ordinary share of S Company. All of S Company's shareholders exchange their shares. Thus, P Corporation issues 150 shares in exchange for all 60 shares of S Company. • The fair value of each share of S Company is P40. The quoted market price of P Corporation's shares on the said date is P16 per share. • The fair value of P Corporation's identifiable assets and liabilities are the same as their book values, except for its non-current assets which have a fair value of P1,500. Required: 1. Solve for the fair value of consideration transferred. 2. Determine the amount of goodwill and prepare the consolidated statement of financial position.
P Corporation, a publicly-listed company, acquired S Company, a privately-owned company, on September 30, 20X1. Given below are their statement of financial position (SFP) as of the date of acquisition: P Corporation Statement of Financial Position September 30, 20X1 Current Assets Non-Current Assets P500 1,300 Current Liabilities Non-Current Liabilities Common Stock, 100 Shares Additional Paid-In Capital Retained Earnings Total Liabilities and Equity 300 400 100 200 800 P1,800 Total Assets P1,800 S Company Statement of Financial Position September 30, 20x1 Current Assets Non-Current Assets P700 3,000 Current Liabilities Non-Current Liabilities Common Stock, 60 Shares Additional Paid-In Capital Retained Earnings Total Liabilities and Equity P600 1,100 60 540 1,400 P3.700 Total Assets P3,700 Additional information about the acquisition are as follows: P Corporation issues 2.5 shares in exchange for each ordinary share of S Company. All of S Company's shareholders exchange their shares. Thus, P Corporation issues 150 shares in exchange for all 60 shares of S Company. • The fair value of each share of S Company is P40. The quoted market price of P Corporation's shares on the said date is P16 per share. • The fair value of P Corporation's identifiable assets and liabilities are the same as their book values, except for its non-current assets which have a fair value of P1,500. Required: 1. Solve for the fair value of consideration transferred. 2. Determine the amount of goodwill and prepare the consolidated statement of financial position.
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 35P
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Transcribed Image Text:P Corporation, a publicly-listed company, acquired S Company, a privately-owned company, on September
30, 20X1. Given below are their statement of financial position (SFP) as of the date of acquisition:
P Corporation
Statement of Financial Position
September 30, 20X1
Current Assets
P500
Current Liabilities
300
Non-Current Liabilities
Common Stock, 100 Shares
Additional Paid-In Capital
Retained Earnings
Total Liabilities and Equity
Non-Current Assets
1,300
400
100
200
800
Total Assets
P1,800
P1,800
S Company
Statement of Financial Position
September 30, 20X1
Current Assets
Non-Current Assets
P700
Current Liabilities
P600
3,000
Non-Current Liabilities
1,100
60
540
Common Stock, 60 Shares
Additional Paid-In Capital
Retained Earnings
Total Liabilities and Equity
1,400
Total Assets
P3,700
P3,700
Additional information about the acquisition are as follows:
P Corporation issues 2.5 shares in exchange for each ordinary share of S Company. All of S
Company's shareholders exchange their shares. Thus, P Corporation issues 150 shares in
exchange for all 60 shares of S Company.
The fair value of each share of S Company is P40. The quoted market price of P Corporation's
shares on the said date is P16 per share.
The fair value of P Corporation's identifiable assets and liabilities are the same as their book values,
except for its non-current assets which have a fair value of P1,500.
Required:
1. Solve for the fair value of consideration transferred.
2. Determine the amount of goodwill and prepare the consolidated statement of financial position.
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