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Parent Corporation acquired all the identifiable net assets of Sub Company by issuing ordinary shares on January 2, 2022. Partial balance sheet for the companies prior to the business combination and immediately following the combination is provided: Parent 65,000 72,000 33,000 400,000 Sub 25,000 20,000 45,000 140,000 10,000 240,000 Consolidated 60,000 Cash Accounts receivable Inventory Buildings Goodwill Total assets 94,000 88.000 650,000 570,000 Accounts payable Bonds payable Common stock, P2 par Share premium Retained earnings Total liabilities and equities 50,000 250,000 100,000 65,000 105,000 570,000 25,000 100,000 25,000 20,000 70,000 240,000 75,000 350,000 160,000 100,000 The only consideration transferred is the issuance of shares with fair value of P8. Parent also paid business combination expenses, share issue costs are twice the amount of indirect costs. Parent and Sub are SMES.

Parent Corporation acquired all the identifiable net assets of Sub Company by issuing ordinary shares on January 2, 2022. Partial balance sheet for the companies prior to the business combination and immediately following the combination is provided: Parent 65,000 72,000 33,000 400,000 Sub 25,000 20,000 45,000 140,000 10,000 240,000 Consolidated 60,000 Cash Accounts receivable Inventory Buildings Goodwill Total assets 94,000 88.000 650,000 570,000 Accounts payable Bonds payable Common stock, P2 par Share premium Retained earnings Total liabilities and equities 50,000 250,000 100,000 65,000 105,000 570,000 25,000 100,000 25,000 20,000 70,000 240,000 75,000 350,000 160,000 100,000 The only consideration transferred is the issuance of shares with fair value of P8. Parent also paid business combination expenses, share issue costs are twice the amount of indirect costs. Parent and Sub are SMES.

Auditing: A Risk Based-Approach (MindTap Course List)
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity
Section: Chapter Questions
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how much is the fair value of the net assets of Sub?
Transcribed Image Text:how much is the fair value of the net assets of Sub?
Parent Corporation acquired all the identifiable net assets of Sub Company by issuing ordinary shares on January 2. 2022. Partial balance sheet for the companies prior to the business combination and immediately following the combination is provided: Parent 65,000 Consolidated 60,000 Sub 25,000 20,000 45,000 140,000 10,000 240,000 Cash Accounts receivable 72,000 94,000 Inventory Buildings Goodwill 33,000 400,000 88,000 650,000 Total assets 570,000 75.000 350,000 Accounts payable Bonds payable Common stock, P2 par Share premium Retained earnings Total liabilities and equities 50,000 25,000 100,000 25,000 20,000 70,000 240,000 250,000 100,000 160,000 65,000 105,000 570,000 100,000 The only consideration transferred is the issuance of shares with fair value of P8. Parent also paid business combination expenses, share issue costs are twice the amount of indirect costs. Parent and Sub are SMES.
Transcribed Image Text:Parent Corporation acquired all the identifiable net assets of Sub Company by issuing ordinary shares on January 2. 2022. Partial balance sheet for the companies prior to the business combination and immediately following the combination is provided: Parent 65,000 Consolidated 60,000 Sub 25,000 20,000 45,000 140,000 10,000 240,000 Cash Accounts receivable 72,000 94,000 Inventory Buildings Goodwill 33,000 400,000 88,000 650,000 Total assets 570,000 75.000 350,000 Accounts payable Bonds payable Common stock, P2 par Share premium Retained earnings Total liabilities and equities 50,000 25,000 100,000 25,000 20,000 70,000 240,000 250,000 100,000 160,000 65,000 105,000 570,000 100,000 The only consideration transferred is the issuance of shares with fair value of P8. Parent also paid business combination expenses, share issue costs are twice the amount of indirect costs. Parent and Sub are SMES.
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