P Company acquired the S Company for an agreed value of $900,000 and issues its common stock to make the deal. The fair value of the Company S net identifiable assets is $800,000. The issue costs of the stock used for payment is $50,000. If P Company was eligible to use IFRS for SME’s and decided to do so, how would the recording of the transaction differ from U.S. GAAP?
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P Company acquired the S Company for an agreed value of $900,000 and issues its common stock to make the deal. The fair value of the Company S net identifiable assets is $800,000. The issue costs of the stock used for payment is $50,000. If P Company was eligible to use IFRS for SME’s and decided to do so, how would the recording of the transaction differ from U.S. GAAP?
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- On January 1, 2021, Brooks Corporation exchanged $1,235,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,185,000. Chandler’s individual assets and liabilities had fair values equal to their respective book values except for the patented technology account, which was undervalued by $246,000 with an estimated remaining life of six years. The Chandler acquisition was Brooks’s only business combination for the year. In case expected synergies did not materialize, Brooks Corporation wished to prepare for a potential future spin-off of Chandler, Inc. Therefore, Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing value. On December 31, 2021, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Brooks Corp. Chandler Inc. Income…On January 1, 2021, Brooks Corporation exchanged $1,259,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,145,000. Chandler’s individual assets and liabilities had fair values equal to their respective book values except for the patented technology account, which was undervalued by $264,000 with an estimated remaining life of six years. The Chandler acquisition was Brooks’s only business combination for the year. In case expected synergies did not materialize, Brooks Corporation wished to prepare for a potential future spin-off of Chandler, Inc. Therefore, Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing value. On December 31, 2021, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Brooks Corp. Chandler Inc. Income…Del Luna Corporation concluded that the fair value of Scarlet Company was P160,000 and paid that amount to acquire all of its net assets. Scarlet reported assets with a book value of P120,000 and a fair value of 196,000 and liabilities with a book value and fair value of P46,000 on the date of combination. Del Luna also paid P6,000 to a search firm for finder’s fees related to acquisition. What amount will be recorded as goodwill by Del Luna Corporation? a. 10,000 b. 26,000 c. 16,000 d. 0
- Del Luna Corporation concluded that the fair value of Scarlet Company was P160,000 and paid that amount to acquire all of its net assets. Scarlet reported assets with a book value of P120,000 and a fair value of 196,000 and liabilities with a book value and fair value of P46,000 on the date of combination. Del Luna also paid P6,000 to a search firm for finder’s fees related to acquisition. What amount will be recorded as goodwill by Del Luna Corporation? 26,000 0 16,000 10,000On January 1, 2024, Brooks Corporation exchanged $1,194,000 fair-value consideration for all of the outstanding voting stock of Chandler, Incorporated. At the acquisition date, Chandler had a book value equal to $1,150,000. Chandler’s individual assets and liabilities had fair values equal to their respective book values except for the patented technology account, which was undervalued by $216,000 with an estimated remaining life of six years. The Chandler acquisition was Brooks’s only business combination for the year. In case expected synergies did not materialize, Brooks Corporation wished to prepare for a potential future spin-off of Chandler, Incorporated. Therefore, Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing value. On December 31, 2024, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Accounts Brooks Corporation…Journey Company entered into agreement with its creditor to exchange its equity instrument and land in place of the financial liability with principal of P5,000,000 and accrued interest of P400,000. The terms of the exchange were 300,000 ordinary shares with P5 par value and P10 fair value. The land transfer has book value of P1,000,000 and fair value of P1,500,000. How much is the gain (or loss) from the extinguishment of the financial liability?
- Sheman Corporation exchanged its common stock, worth P500,000 for all of the net assets of Darna Company in a business combination treated as a purchase. At the date of combination, Sheman’s net assets had a book value of P650,000 and a fair value of P900,000. Darna Company’s net assets had a book value of P450,000 and a fair value of P460,000. Immediately following the combination, the net assets of the combined company should have been reported at what amount?Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $941, 800 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,177,250. Also at the acquisition date, Stanford's book value was $546, 100. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Items Book Value Fair Value Trade names (indefinite life) $ 300, 900 $ 360, 900 Property and equipment (net, 8-year remaining life) 233, 600 262, 400 Patent (14-year remaining life) 120, 900 154, 500 For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Accounts Plaza Stanford Revenues $ (795, 100) $ (782,600) Cost of goods sold 439, 600 331, 000 Depreciation expense 186, 400 29, 200…On July 19, 2021, SUNOB acquired 60% of the outstanding shares of YSAE. The business combination resulted to a gain on bargain purchase of P200,000. The consideration paid was exactly the fair value for the 60% outstanding stocks, and the fair value of the non-controlling interest is not given. Fair value of the net assets of YSAE amounted to P1,000,000 on that date. How much is the gain on acquisition attributable to SUNOB? Zero 600,000 200,000 120,000
- On December 29, 20x1, an entity commits itself to purchase a financial asset for ₱10,000, whichis its fair value on commitment date (trade date). Transaction costs are immaterial. OnDecember 31, 20x1 and on January 4, 20x2 (settlement date) the fair values of the asset are₱12,000 and ₱15,000, respectively. If the entity uses the settlement date accounting and that theinvestment is classified as held for trading, how much is the carrying amount of the investment inthe December 31, 20x1 statement of financial position?Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $985,400 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,231,750. Also at the acquisition date, Stanford's book value was $532,500. Several individual items on Stanford’s financial records had fair values that differed from their book values as follows: Items Book Value Fair Value Trade names (indefinite life) $ 301,200 $ 354,900 Property and equipment (net, 8-year remaining life) 232,000 255,200 Patent (14-year remaining life) 120,400 161,000 For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Accounts Plaza Stanford Revenues $ (828,200) $ (746,500) Cost of goods sold 458,700 321,700 Depreciation expense…Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $539,650 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider’s book values approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider’s fair and book value differences as follows: Book Values Fair Values Computer software $ 46,000 $ 106,500 Equipment 79,500 60,000 Client contracts 0 124,000 In-process research and development 0 28,750 Notes payable (66,000 ) (71,850 ) At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses): Pratt Spider Cash $ 15,850 $ 12,500 Receivables 160,500 59,500…
