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ABC ACTIVITY 3

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Christian Edwin Jude Palaganas
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9 views4 pages

ABC ACTIVITY 3

Uploaded by

Christian Edwin Jude Palaganas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PALAGANAS, CHRISTIAN EDWIN JUDE O.

BSA – 3A
ACCOUNTING BUSINESS COMBINATION
ACTIVITY #3

*Problem 1: Consolidation of Assets*

Company A acquires Company B for ₱1,000,000. The balance sheets of both


companies are as follows:

Company A:

 Assets: ₱5,000,000
 Liabilities: ₱2,000,000
 Equity: ₱3,000,000
Company B:

 Assets: ₱2,000,000
 Liabilities: ₱800,000
 Equity: ₱1,200,000
Prepare the consolidated balance sheet of the merged entity.

Total Assets = Company A assets + Company B assets


= P5,000,000 + 2,000,0000
= P7,000,000
Total Liabilities = Company A Liability + Company B Liability
= 2,000,000 + 800,000
= 2,800,000

Total Equity = Company A Equity + Company B Equity


= 3,000,000 + 1,200,000
= 4,200,000

Consolidated Balance Sheet:


Consolidated Balance Sheet Amount
Assets
Total Assets 7,000,000
Liabilities
Total Liabilities 2,800,000
Equity
Total Equity 4,200,000

*Problem 2: Goodwill Calculation*

Company X acquires Company Y for P3,500,000. The net assets of Company


Y are valued at P3,000,000. Calculate the goodwill arising from the
acquisition.

*Solution.*

Good will = Acquisition Price - Net Assets of Company Y

= P3,500,000 – 3,000,000
Good will = 500,000

*Problem 3: Consolidation of Liabilities*

Company P acquires Company Q for P2,500,000. The balance sheets of both


companies are as follows:

Company P:
Assets: 8,000,000
Liabilities: P3,500,000
Equity: P4,500,000

Company Q:

Assets: 3,500,000
Liabilities: 1,800,000
Equity: 1,700,000

Prepare the consolidated balance sheet of the merged entity.

Total Assets = Company P + Company Q


= 8,000,000 + 3,500,000
= 11,500,000

Total Liabilities = Company P + Company Q


= 3,500,000 + 1,800,000
= 5,300,000

Total Equity = Company P + Company Q


= 4,500,000 + 1,700,000
= 6,200,000

Consolidated Balance Sheet of both Company P & Q:

Consolidated Balance Sheet Amount


Assets
Total Assets 11,500,000
Liabilities
Total Liabilities 5,300,000
Equity
Total Equity 6,200,000

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