Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Chapter 6, Problem 2E
To determine
Business combination:
Business combination refers to the combining of one or more business organizations in a single entity. The business combination leads to the formation of combined financial statements. After business combination, the entities having separate control merges into one having control over all the assets and liabilities. Merging and acquisition are types of business combinations.
Consolidated financial statements:
The consolidated financial statements refer to the combined financial statements of the entities which are prepared at the year-end. The consolidated financial statements are prepared when one organization is either acquired by the other entity or two organizations merged to form the new entity. The consolidated financial statements serve the purpose of both the entities about financial information.
Value analysis:
The value analysis in a business combination is an essential part of determining the worth of the acquired entity. The
:
Prepare the consolidated statement of
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Case 2: the Investment Held for Trading Securities account in the book of Tatay (acquired in 2020) represents 30% ownership interest in Walanay, Inc. Walanay subsequently reacquires 50% of its outstanding shares from other investors. The previously held equity of Tatay have a fair value of three times its book value now. Tatay elected to measure NCI at ‘proportionate share’.With the stated facts, answer the following:1.How much is the Consideration Transferred?a. P 1,350,000.00b. P 1,900,000.00c. P 1,750,000.00d. P 1,800,000.002.How much is the Non-Controlling Interest in the acquiree?a. P 0.00b. P 150,000.00c. P 684,000.00d. P 1,200,000.003.How much is the Fair Value of the previously held equity interest in the acquiree?a. P 0.00b. P 540,000.00c. P 450,000.00d. P 500,000.00
Problem 1Parekoy Company acquires 150,000 of the 1,000,000 Marekoy Company’s common stock for P500,000 cash and carries the investment as a financial asset. A few months later, Parekoypurchases another 600,000 of Marekoy Company’s stock for P2,160,000. At that date, Marekoy Company reports identifiable assets with a book value of P3,900,000 and a fair value of P5,100,000, and it has liabilities with a book value and fair value of P1,900,000. The fair value of the non-controlling interest in Marekoy Company is P900,000.
1.Non-controlling interest arising on consolidation is to be valued on the full (fair value) basis or “Full/Gross-up” Goodwill:a. P300,000b. P500,000c. P800,000d. P900,0002. The remeasurement gain or loss to be recognized to profit and loss account if the 15% ownership is a FVTPL (fair value through profit and loss)when the additional shares are acquired:a. Zerob. P40,000 gainc. P40,000 lossd. P68,000 loss3. The remeasurement gain or loss to be recognized to profit or…
Problem 1Parekoy Company acquires 150,000 of the 1,000,000 Marekoy Company’s common stock for P500,000 cash and carries the investment as a financial asset. A few months later, Parekoypurchases another 600,000 of Marekoy Company’s stock for P2,160,000. At that date, Marekoy Company reports identifiable assets with a book value of P3,900,000 and a fair value of P5,100,000, and it has liabilities with a book value and fair value of P1,900,000. The fair value of the non-controlling interest in Marekoy Company is P900,000. 1. Goodwill arising on consolidation is to be valued on the proportionate basis or “Partial” Goodwill a. P 84,000b. P100,000c. P300,000d. P400,000
2. Non-controlling interest arising on consolidation is to be valued on the proportionate basis or “Partial” Goodwill:a. P300,000b. P500,000c. P800,000d. P900,000
3. Goodwill arising on consolidation is to be valued on the full (fair value) basis or “Full/Grossup” Goodwill:a. P 84,000b. P100,000c. P300,000d. P400,000
Chapter 6 Solutions
Advanced Accounting
Ch. 6 - Prob. 1UTICh. 6 - Prob. 2UTICh. 6 - Prob. 3UTICh. 6 - Prob. 4UTICh. 6 - Prob. 5UTICh. 6 - Prob. 6UTICh. 6 - Prob. 7UTICh. 6 - Prob. 1ECh. 6 - Prob. 2ECh. 6 - Prob. 3E
Ch. 6 - Prob. 4ECh. 6 - Problem 6-1 (LO 1) Cash flow, year subsequent to...Ch. 6 - Problem 6-4 (L02) Consolidated EPS. On January 1,...Ch. 6 - Prob. 6.8.1PCh. 6 - Prob. 6.8.2PCh. 6 - Problem 6-9 (LO 3) Worksheet, consolidated...Ch. 6 - Problem 6-9 (LO 3) Worksheet, consolidated...Ch. 6 - Prob. 6.11.1PCh. 6 - Prob. 6.11.2PCh. 6 - Problem 6-12 (LO 4) Worksheet, separate tax,...Ch. 6 - Prob. 6.12.2P
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