PRACTICAL ACCOUNTING 2 . . [BUSINESS COMBINATION PART? — SCORE. Nan 28 ean 2 poise, Sere tem mre. Show yur soins. 2 pi Sete es fous rms een Pen Corpora eat ha sac pen ‘ralance consisted 5 $600,000 ‘equity ca 00 Sm The is anal oO Tyoeueantageme kf 1500 IND aes pro Oe ay 2207, hs day Cue 15020 ow nay 3.207 () sane te Pee lt pis Pag taney arte Pinte fe acal osk + a ay =a 12 “Assume tat Penguin old the additonal 3,00 shares wo use inrest A? pects persentae ownership immediately after the sale of stock would be nme on uit peel en nn a Uhlanceshet information Venus ust prio fo the acquisition Cash and Receivables $35.00 7. . -- | Inventory 75,000 [0 Land 100,000 © | Buikiings and Equipment (net) 220,000 Total Assets $330,000 | Accounts Payable ‘$65,000 | Bonds Payable 150,000 | Common Stock 100.000 Retined Eamines 115,000 Total Linbiites and Stockholders’ Equity $430,000 vibe dau ofthe busines combination, Vee net assets ad Lables approximate fir vale except for inventory, ‘which had a far value of $60,000, land which had a fair valve of $125,000, and buildings and equipment (net), which bad 2 fir value of $250,000. A, 4 Based onthe informatio provided, what amouat of inventory will be included inthe consolidated balance sheet immediately following the acquisition? N $6000 0 Fo, 38 $75,000 € $15,000 1D $45,000 {) & Based on te information provided, what amount of goodwill wil be inchded inthe consolidated balance sheet immesiately folowing the acquisition? $30,000 3 $15,000 C, $85,000 $35,000 $ W Company is acquiring OMG Company. OMG bas the following intangible asset: Patent on a product that is deemed 1o ve no usefl life, P10,000; Customer list with an observable value of PSO,000; A five lease with a 4) favorable terms with a discounted present value of P8000; and Identifiable R & D of P100,000. coh ag lange Asef of ONG Company? A 180,000, VECO 4 * (8) 15k000 exper 360,00 rece [5600 (c} 160.000 5 = \ec.o¢ {D) 16200. veri = eros Corporation acquired 40% of ABC Inc.'s common stock fr $460,000 book value on January 1, 2006 ‘equity consisted of P500,000 capital sock and PS00,000 retained-eamings. On September I 206 Heron tage on ional 3% interes in ABC fr F210,000. In bah cases, ABC bok vale equaled the far aie 110%, Compa the goodwill un on bargain purchase on December 31,2006?fon PAUILIAN The inerestment wns neecrantel for HAN WH 20H), Ae of this dite, A has Were ah Hteveat 40H HEIN, A wir is follow a + Ne pen Ny Hed 199% he Ws net itottiabte il 19 0 a0, ‘vie i 14,000,008 os not the nwvn canning. interst's yropeatinats share of 1's ier nine st {8 Heer an ay tein VA Ho ewe im rn ; ‘aK NN 1 4 940.000 © S1o patton howe to ho te 9% Tho gain os to be engine in 2015 ther connprelensive income? om by issuing, shares Of ts ‘connbination asd iramnciatey f | Zyxel Globe Book Value Book Value Combination Qo cash 65,000 25,000 0.06 Accounts Receivable 72,000 |ieere 20,000 94,0 lnventory 33,000 45,000 1,000 nillings and equip 400,000," 150,000 650,000 Gooawill e,00 2 Fou Asses 370,000 ne Accounts payable 50,000- 25,000 15,000 Bonds payable 250,000 100,000 380,000 Common stock, P2 par 100,000 25,000 160,000 Aukitional paid-in apital 20,000 245,000 Retained earings ond Total liabilities and Capital 240,000 7 | 1H What numberof shares did Zyxel issue for this acquisition? 1, P80,000 b, P50,000 ©P30,000 , P7500 \\ DX Acwhat price Zyxel stock trading when stock was issued for this acquisition? aP2 E Common Glock, 2 p flue of the net assets held by globe tattoo at the date of combination? ) a. PL15,000 227,000 «. 270,000 4,497,000 A Wit smut of good wil be reported bythe combined entity immediately following the combination? : pe P 13,000 ’. P125,000 ©. 173,000 4,413,000‘Assets Cash 175,000 Accounts receivable 250,000 D inventories 725,000 Property, plant and 950,000 equipment P 2,100,000 cash. On the date of acquisition, the fair market value of B.o. (On December 31, 2013 the Taylor Swift Inc. bought all of the outstanding. B.0.B.’s property, plant equipment was P 1,100,000. The fair value of all other assets to their book values. In addition, not included above were costs in-process research and a ‘Company as of December 31, 2013 is as follows: Liabilities and Shareholders’ Equity Current liabilities P 250,000 Mortgage payable 450,000 Ordinary share 200,000 capital Share premium 400,000 ‘Accumulated profits 800,000 P 2,100,000 shares of B.o.B. Company for P 1,800,000 615,000, while the fair value of and liabilities of B.o.B. were equal development of B.o.B Company s inventories was P amounting to P 100,000. Goodwill amounted to: ctu tan donee, tee | a.P-400,000 Fav ieee |b. P:300,000 Pre | @P 200,000 RYO HP 0. Mandy was merged into Sing, Inc. in a combination properly accounted for as purchase of interest. Their condensed balance sheet before the combination show: Sing Mandy Current assets 2,288,000 1,627,600 Plant and equipment, net 4,654,000 1,040,000 Patents ~ —_260,000_ Total assets PG 942,000“ P 2,927,600 Liabilities ~p2,704,000 P_ 171,600 Capital stock, par 100 2,600,000 1,066,000 Share premium 390,000 390,000 ‘Accumulated profits pete _1,066,000- Total liabilities and equity 6,942,000 P 2,927,000 appraiser's report, Mandy assets have fair market values of P1,653,600 for current assets P1,248,000 for ipment and P338,000 for patents. Mandy’s liabilities are properly valued . Sing purchases Mandy's net for P3,068,000. = How should the difference between the book value of Mandy's net assets and the consideration paid by Sing be n U 7 “considered? FAY 1,6534600 acs, ce a. Goodwill; P338,000 Increase in assets; P 78,000 72,4, 248 1°90 72 b. Goodwill, 338,000 Increase in assets; P 234,000 ye yuc co sc. Goodwill; P 0 Increase in assets; P 234,000 Jno, cS," (4) Goodwill; Po Increase in assets; P 312,000 (On January 1, 20x1, ABC Co. acquired all of the identifiable assets and assumed all of the liabilities of B, . by paying cash of P2,000,000. On this date, the identifiable assets acquired and liabilities assumed have fair values of P3,200,000 and P1,800,000, respectively. ABC Co. has estimated restructuring provisions of 400,000 representing costs of exiting the activity of B, costs of terminating employees of B, and costs of relocating the terminated employees. Requirement: Compute for the goodwill (gain on bargain purchase). FV 4,000,006 C\Hoo,cce Sol GH, occ rovisions _CA02, co GecduoM Bde Cash 200,000, aa