Chapter 2

No. of Page PROBLEM Page

1-4 Company Z acquires 80% of company Y for P10,000,000, carrying value of 489
company Y net assets at time of acquisition being P6,000,000 and fair value of
these net identifiable assets being P8,000,000.
5-8 Entity Subsidiary has 40% of its share publicly traded on an exchange. 490
9-13 Company acquires 15 percent of Serap Company’s common stock for P500,000 490
cash and carries the investments using the cost methods.
14-17 On September 1, 20x6, Company P acquires 75% (750,000 ordinary shares) of 491
Company S for P7,500,000 (P10 per share).
18-19 All the issued and outstanding common stock of Manila Company were bought 492
by Makati Company on October 1, 20x6 for P700,000.
20 On January 1, 20x6, Gold Rush Company acquires 80% ownership in California 493
Corporation for P200,000.
21 The Lampara Company acquired a 70% interest in the Oak Company for 493
P1,960,000 when the fair value of Oaks identifiable assets and liabilities was
P700,000 and elected to measure the non-controling interest at its share …
22 The Natural Company acquired 80% of the Loco Company for a consideration of 493
transferred of P100 million.
23 The Moon Company acquired a 70% interest in the Swan Company for 493
P1,420,000 when the fair value…….
24 On October 1, 20x6 The Ting Company acquired 100% of the Green Company 494
when the fair value of Green’s net assets was p116 million……
25 100% of the equity capital of the Rau Company was acquired by the Swiffs 494
Company on June 30, 20x6.
26 Lazer Corporation acquired 80% of High-Energy Company on August 1 for 494
P500,000.
27 Judd Company issued nonvoting preferred stock with a fair value of P1,500,000 495
in exchange for all the outstanding common stock of the Bath Corporation …….
28-29 Harrison, Inc. acquires 100% of the voting stock of Rhine Company on January 1, 495
20x5 for P400,000 cash.
30 Dosmann, Inc. bought all outstanding shares of Lizzi Corporation o0n January 1, 495
20x5, for P700,000 in cash.
31 Lauren Corporation acquired Sarah, Inc. on January 1, 20x6 by issuing 13,000 496
shares of common stock with a P10 per share …..
32-33 Parlor Company acquires 70% of Saloon Company’s common stock for P225,000 496
cash.
34 Seminarian, Inc. has 100,000 shares of P2 per value stock outstanding. 497
35 Entity P has 90% controlling interest in Entity S. 497
36 Pedro Company owns 80,000 shares of Santa corporation’s 100,000 outstanding 497
common shares, acquired at book value.
37 Parent Corporation owns an 85% interest in Subsidiary Corporation. 497
38 Parents Ltd. Has an 80% investment in Salentis Ltd. With a carrying amount of 498
P80,000,000.
39 Padyak Company owns 80,000 shares of Sirkulo Corporation’s 100,000 498
outstanding common shares, acquired at book value.
40 Padyak Company owns 80,000 shares of Sirkulo Corporation’s 100,000 498
outstanding common shares, acquired at book value.
Chapter 2

41-42 Blais Corporation purchased 100% of Candle Company for P600,000. 498
43 Paro Company purchased 80% of the voting common stock of Sabon Company 499
for P900,000.
44 Pagach Company purchased 80% of the voting common stock of Rage Company 499
for P1,800,000.
45 Chapel Hill Company had common stock of P350,000 and retained earnings of 499
P490,000.
46 Beta Company acquired 100% of the voting common shares of Standard Video 500
Corporation, its bitter rival, by issuing bonds with a…..
47-55 The financial statements for Goodwin, Inc. and Corr Company for the year ended 500
December 31, 20x6, prior to Goodwin’s business……
56-59 On July 1, 20x6, Parent Ltd. Acquired all the issued share capital of Sub Ltd. 502
Giving in exchange of 100,000 shares in Parent Ltd.
60-68 On January 1, 20x6, Park Corporation and Strand Corporation and their 503
condensed balance sheet are as follows:
69 On January 1, 20x6, Colorado Corporation acquired 75% of Denver Company’s 505
voting common stock for P90,000 cash.
70 The balance sheets of Pedro Ltd. And Santi Ltd. On June 30, 20x6 were as 505
follows:
71 Mark, as a private limited company, has arranged for Man, a public limited 506
company, to acquire it as a means of obtaining a stock exchange listing.
CHAPTER 3
72-75 Watkins, Inc. acquires all the outstanding stock of Glen Corporation on January 506
1, 20x6.
76 On January 1, 20x6. Brendan Inc. reports net assets of P760,000 although 507
(equipment with a four-year life) having a book value of P440,000 is worth…..
77 On January 1, 20x6. Turner Inc. reports net assets of P480,000 although a 507
building (with a 10-year life) having a book value of P260,000 is now worth
P300,000.
78 On January 1, 20x6. Harry Inc. reports a net asset of P880,000 although a patent 507
(with a 10-year life) having a book value of P330,000 is now worth….
79-82 McGuire Company acquired 90% of Hogan Company on January 1, 20x6. For 508
P234,000 cash.
83-87 Bell Company acquires 80% of Demers Company for P500,000 on January 1, 508
20x5.
88 On January 1, 20x5, Wilt Corporation pays P388,000 for a 60% ownership in 509
Chamberlain.
89-92 On January 1, 20x6, Parent Company purchased 80% of the common stock of 509
Subsidiary Company for P316,000.
93 Mega Corporation acquired 100% of Junior Company. At the acquisition date, 510
Junior’s inventory had a book and market value of P60,000 and P80,000.
94-97 On January 1, 20x6, Parent Company acquired 90% of Subsidiary Company in 510
exchange for 5,400 shares of P10 per common stock having a market value of
P120,600.
98-105 On January 1, 20x6, Parent Company acquired 90% of Subsidiary Company in 512
exchange for 5,400 shares of P10 per common stock having a market value of
P120,600…….. In addition.
Chapter 2

106 Johnson, Incorporated acquired 90 percent of Nemec Enterprises on November 513

1, 20x5.
107 Prince Company acquires Duchess, Inc. on January 1, 20x6. 513
108-109 General, Inc., a calendar-year corporation, acquires 70% of Problem Company on 513
September 1, 20x5 and an additional 10% on April 1, 20x6.
110 On April 1, 20x6, Nokia, Inc. exchanges P430,000 fair-value consideration for 70 514
percent of the outstanding stock of Ericsson Corporation.
111 On January 1, 20x6, Payne Corp. purchased a 70% of Shayne Corp.’s P10 par 514
common stock for P900,000.
112-114 On January 3, 20x6, Ali Company acquired 80 percent of Frazer Corporation’s 514
common for P344,000 in cash.
115 At the end of 20x6, Paper Company’s stockholders’ equity includes common 515
stocks of P500,000 and additional paid-in capital of P300,000.
116 The White Company acquired an 80% interest in the Pulley Company when 515
Pulley’s equity comprised share capital of P100,000 and retained earnings or
P500,000.
117-118 On January 2, 20x6, Par Company purchased 75% of Sub Company’s outstanding 515
common stock. Selected balance sheet data at December 31, 20x6 is as follows:
119-122 On January 1, 20x5, Bristol Company acquired 80 percent of Animation 516
Company’s common stock for P280,000 cash.
123-125 Errant Inc purchased 100% of outstanding voting shares of Grub Inc. for 517
P200,000 on January 1, 20x4. On that date, Grub Inc had common stock and
retained earnings worth P100,000 and P60,000, respectively. Goodwill is tested
annually for impairment. The balance sheet of both companies, as well as Grub’s
fair market values on the date of acquisition are disclosed below:
126-129 Davis Inc. purchased a controlling interest in Martin Inc on January 1, 20x2, 518
when Martin’s common stock and retained earnings were carried at P1890,000
and P60,000 respectively.
130-131 A subsidiary is acquired on January 1, 20x2 for P10 million. The subsidiary’s book 519
value at the date of acquisition was P2 million.
132-139 Brand X Inc. purchased to controlling interest in Brand Y Inc. for P350,000 on 519
January 1, 20x1. On that date, Brand Y Inc. had common stock and retained
earnings worth P180,000 and P20,000, respectively.
140 Northern Telecom acquired all of the voting common stock of Ancom Ltd. On 521
January 1, 20x4. The P25,000 excess of acquisition cost over Ancom’s book value
was properly allocated on follows:
141 On January 1, 20x6, Post Company acquired an 80%investment in Stake 522
Company. The acquisition cost was equal to Post’s equity in Stake’s net assets at
that date.
142 On January 1, 20x5, Wilhelm Corporation acquired 90 percent of Kaiser 522
Company’s voting stock, at underlying book value. The fair value of the
noncontrolling interest was equal to 10 percent of the book value of Kaiser at
that date.
143 On January 1, 20x6, Plimsol Company acquired 100 percent of Shipping 523
Corporation’s voting shares, at underlying book value. Plimsol uses the cost
method in accounting for its investment in shipping.
144-145 Parent Corporation acquired 70 percent of subsidiary on January 1, 20x5. At that 523
Chapter 2

date, Subsidiary had equipment (ten years remaining life) with a market value
and book value of P80,000 and P60,000 respectively.
146 Toni Company is an 80 percent subsidiary of Nathan industries. At the 524
acquisition date (January 1, 2015), Toni Company’s plant assets (net) had a book
and market value of P180,000 and P250,000 respectively.
147-164 Big Guy Inc. purchased 80% of the outstanding voting shares of Humble Corp. 524
For P360,000 on July 1, 20x1. On that date, Humble Corp had Common Stock
and Retained Earnings worth P180,000 and P90,000, respectively.
165 A company reports P10,200,000 in goodwill. At the end of 20x3, the following 527
information is collected:
166 A&T Corporation acquired Belleast Corporation on January 1, 20x4. The merger 528
resulted in goodwill of P25,000.
CHAPTER 4
167-170 The separate incomes (which do not include investment income) of Pell 528
Corporation and Sell Corporation, its 80% owned subsidiary, for 20x6 were
determined as follows:
171-173 Income statement information for the year 20x6 for Perfect Corporation and its 529
80% owned subsidiary, Seven Corporation, is as follows:
174 PP Corp. owns 80% of SS common stock. During 20x6, PP sold SS P250,000 of 530
inventory on the same terms as sales made to third parties. SS sold all the
inventory purchased from PP in 20x6.
175-177 Parry Corporation owns an 80% interest in Starry Corporation acquired several 530
years ago. Starry regularly sells merchandise to its parent at 125% of Starry’s
cost.
178 Power Co. is a manufacturer and Slack Co., its 100%-owned subsidiary, is a 531
retailer. The companies are vertically integrated. Thus, Slack purchased all of its
inventory from power.
179 Bruce Company owns 80% of Lee Corp.’s common stock. During October 20x6, 531
Lee sold merchandise to Bruce for P100,000. At December 31, 20x6, gross profit
percentage were 30% for Bruce and 40% for Lee.
180 Sailing Company owns 100% of the capital stock of both Twill Corp. and Webb 531
Corp. Twill purchases merchandise inventory from Webb at 140% of Webb’s
cost.
181 The Maroons Company holds a 70% interest in The Haena Company. At the 532
current year end Maroons holds inventory purchased from Haena for P270,000
at cost plus 20%.
182 Rosas Corp. acquired a 70% interest in Camia Co. in 20x5. For the year ended 532
December 31, 20x5 and 20x6, Camia Co. reported net income of P160,000 and
P180,000, respectively.
183-194 On January 1, 20x5, Par Company purchased 80% of the outstanding shares of 532
Sub Company by paying P340,000, the Sub Company’s common stock and
retained earnings on this date amounted to P150,000 and P230,000 with a
remaining life of 10 years.
195 On December 31, 20x7, Akin Corp. acquired 80% of the outstanding shares of 534
Saiyo Co. at the cost of P1,600,000. On that date, Saiyo Co. had P600,000 capital
stock and P1,000,000 of retained earnings.
196 On December 31, 20x4, Paste Corporation acquired 80 percent of the 535
Chapter 2

outstanding shares of Sachet Company at a cost of P600,000. On that date,

Sachet Company had P200,000 of capital stock P500,000 of retained earnings.
197 Paper Corporation acquired an 80% interest in Sugar Corporation for P600,000 536
on January 1, 20x4 at which t6ime Sugar’s stockholder’s equity consisted of
P500,000 common stock and P200,000 retained earnings.
198 On January 1, 20x4, Mahusay Co. acquired 80% of the outstanding shares of 536
Mabait Co. at a price that included P25,000 of excess because of undervaluation
of the land.