TOOLAD Company agreed agreed to pay P850,000 cash and issue 50,000 shares of its P10 par (20 current fair value a share) ordinary share on September 30, 2021, to OVER Corporation for all the net assets of OVER except cash. In addition, TOOLAD agreed that if the fair market value of its ordinary share was not P20 a share or more on September 30, 2022, a sufficient number of additional ordinary shares would be issued to OVER to make the aggregate market value of its TOOLAD ordinary shareholdings equal to P1 million on that date. The statement of financial position of OVER on September 30, 2021 with related current fair values of assets and liabilities, is as follows: Book Вook Fair Fair Value Value Value Value Cash 100,000 100,000 Current Liabilities 700,000 700,000 Accounts Receivable, net 300,000 300,000 Long-term Debt 500,000 480,000 Merchandise Inventory 520,000 680,000 Ordinary Share, P5 par 20,000 Share Premium 600,000 Prepaid Expenses 20,000 400,000 Land 180,000 180,000 Retained Earnings 500,000 Building 500,000 650,000 Equipment 1,000,000 1,250,000 Other Plant Assets 80,000 100,000 Out-of-pocket costs of the business combination paid by TOOLAD on September 30, 2021, were as follows: Audit fees (SEC registration statement)- P30,000; Finder's Fee-P35,000; Legal Fees (business combination )-P15,000; Legal fees (SEC registration statement)-P20,000; Printing Cost (securities and SEC registration statement)-P25,000; SEC registration fee-P350. Assume that on September 30, 2022, the market value of TOOLAD Corporation's ordinary share was P16 a share. Compute the added number of shares to be issued.
TOOLAD Company agreed agreed to pay P850,000 cash and issue 50,000 shares of its P10 par (20 current fair value a share) ordinary share on September 30, 2021, to OVER Corporation for all the net assets of OVER except cash. In addition, TOOLAD agreed that if the fair market value of its ordinary share was not P20 a share or more on September 30, 2022, a sufficient number of additional ordinary shares would be issued to OVER to make the aggregate market value of its TOOLAD ordinary shareholdings equal to P1 million on that date. The statement of financial position of OVER on September 30, 2021 with related current fair values of assets and liabilities, is as follows: Book Вook Fair Fair Value Value Value Value Cash 100,000 100,000 Current Liabilities 700,000 700,000 Accounts Receivable, net 300,000 300,000 Long-term Debt 500,000 480,000 Merchandise Inventory 520,000 680,000 Ordinary Share, P5 par 20,000 Share Premium 600,000 Prepaid Expenses 20,000 400,000 Land 180,000 180,000 Retained Earnings 500,000 Building 500,000 650,000 Equipment 1,000,000 1,250,000 Other Plant Assets 80,000 100,000 Out-of-pocket costs of the business combination paid by TOOLAD on September 30, 2021, were as follows: Audit fees (SEC registration statement)- P30,000; Finder's Fee-P35,000; Legal Fees (business combination )-P15,000; Legal fees (SEC registration statement)-P20,000; Printing Cost (securities and SEC registration statement)-P25,000; SEC registration fee-P350. Assume that on September 30, 2022, the market value of TOOLAD Corporation's ordinary share was P16 a share. Compute the added number of shares to be issued.
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
Chapter12: Intangibles
Section: Chapter Questions
Problem 18E
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Transcribed Image Text:TOOLAD Company agreed agreed to pay P850,000 cash and issue 50,000 shares of its P10 par (20 current fair value a
share) ordinary share on September 30, 2021, to OVER Corporation for all the net assets of OVER except cash. In
addition, TOOLAD agreed that if the fair market value of its ordinary share was not P20 a share or more on
September 30, 2022, a sufficient number of additional ordinary shares would be issued to OVER to make the
aggregate market value of its TOOLAD ordinary shareholdings equal to P1 million on that date. The statement of
financial position of OVER on September 30, 2021 with related current fair values of assets and liabilities, is as
follows:
Book
Вook
Fair
Fair Value
Value
Value
Value
Cash
100,000
100,000 Current Liabilities
700,000 700,000
Accounts Receivable, net
300,000
300,000 Long-term Debt
500,000 480,000
680,000 Ordinary Share, P5 par
20,000 Share Premium
Merchandise Inventory
520,000
600,000
Prepaid Expenses
20,000
400,000
Land
180,000
180,000 Retained Earnings
500,000
Building
500,000
650,000
Equipment
1,000,000
1,250,000
Other Plant Assets
80,000
100,000
Out-of-pocket costs of the business combination paid by TOOLAD on September 30, 2021, were as follows: Audit
fees (SEC registration statement)- P30,000; Finder's Fee-P35,000; Legal Fees (business combination )-P15,000; Legal
fees (SEC registration statement)-P20,000; Printing Cost (securities and SEC registration statement)-P25,000; SEC
registration fee-P350. Assume that on September 30, 2022, the market value of TOOLAD Corporation's ordinary
share was P16 a share. Compute the added number of shares to be issued.
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