Parent Company's stockholders' equity as of December 31, 2020 is P7,308,000. On January 1, 2021, Parent acquires 30% of Subsidiary Company's ordinary sharesfor P540,000 cash and by issuing its own shares with a fair value of P1,350,000. Parent acquired significant influence over Subsidiary as a result of stock acquisition.After four months, Parent purchases another 60% of Subsidiary's ordinary shares for a cash payment of P3,942,000. On this date, Subsidiary reports identifiable netassets with carrying value of P6,480,000 and fair value of P11,520,000 and it has liabilities with a book value and fair value of P3,240,000.At the acquisition date, net loss reported by Subsidiary for the four-month ended amounted to P900,000. The fair value of the 10% non-controlling interest isP1,296,000. Non-controlling interest is valued using the proportionate basis. Parent also paid the following: P90,000 for legal fees, P72,000 for finder's fees,P77,400 for accountant's fees, P64,800 for audit fee and P19,800 for printing of stock certificates.Immediately after the business combination, how much is the consolidated total equity?

The goodwill or gain on bargain purchase refers to the excess or short amount paid for the…

ush and by issuing its own shares with a fair value of P1,350,000. Parent acquired si hs, Parent purchases another 60% of Subsidiary's ordinary shares for a cash paymen ying value of P6,480,000 and fair value of P11,520,000 and it has liabilities with a E ion date, net loss reported by Subsidiary for the four-month ended amounted to P9C on-controlling interest is valued using the proportionate basis. Parent also paid the fe

ush and by issuing its own shares with a fair value of P1,350,000. Parent acquired si hs, Parent purchases another 60% of Subsidiary's ordinary shares for a cash paymen ying value of P6,480,000 and fair value of P11,520,000 and it has liabilities with a E ion date, net loss reported by Subsidiary for the four-month ended amounted to P9C on-controlling interest is valued using the proportionate basis. Parent also paid the fe

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 26E

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Parent Company’s shareholders’ equity as of December 31, 2019 is P2,030,000. On January 1, 2020, Parent acquires 25% of Subsidiary Company’s ordinary share for P150,000 cash and by issuing its own shares with fair value of P200,000. Parent acquired significant influence over Subsidiary as a result of acquisition. After three months, Parent purchases another 55% of Subsidiary’s ordinary share for cash payment of P1,100,000. On this date, Subsidiary reports identifiable assets with carrying value of P1,800,000 and fair value of P3,200,000 and it has liabilities with a book value and fair value of P900,000. At the acquisition date, net income reported by Subsidiary for three-month ended amounted to P500,000. The fair value of 20% NCI is P360,000. NCI is valued using the proportionate basis. Parent also paid the following: P25,000 for broker’s fee; P20,000 for pre-acquisition audit fee; P21,500 for legal fees; P18,000 for SEC registration of share issued and P5,500 for printing of share…
arent Company’s stockholders’ equity as of December 31, 2020 is P7,308,000. On January 1, 2021, Parent acquires 30% of Subsidiary Company’s ordinary shares for P540,000 cash and by issuing its own shares with a fair value of P1,350,000. Parent acquired significant influence over Subsidiary as a result of stock acquisition. After four months, Parent purchases another 60% of Subsidiary’s ordinary shares for a cash payment of P3,942,000. On this date, Subsidiary reports identifiable net assets with carrying value of P6,480,000 and fair value of P11,520,000 and it has liabilities with a book value and fair value of P3,240,000. At the acquisition date, net loss reported by Subsidiary for the four-month ended amounted to P900,000. The fair value of the 10% non-controlling interest is P1,296,000. Non-controlling interest is valued using the proportionate basis. Parent also paid the following: P90,000 for legal fees, P72,000 for finder’s fees, P77,400 for accountant’s fees, P64,800 for audit…
P Company’s shareholders’ equity as of December 31, 2019 is P2,030,000. On January 1, 2020, P acquires 25% of S Company’s ordinary share for P150,000 cash and by issuing its own shares with fair value of P200,000. P acquired significant influence over S as a result of acquisition. After three months, P purchases another 55% of S's ordinary share for cash payment of P1,100,000. On this date, S reports identifiable assets with carrying value of P1,800,000 and fair value of P3,200,000 and it has liabilities with a book value and fair value of P900,000. At the acquisition date, net income reported by S for three-month ended amounted to P500,000. The fair value of 20% NCI is P360,000. NCI is valued using the proportionate basis. P also paid the following: P25,000 for broker’s fee; P20,000 for pre-acquisition audit fee; P21,500 for legal fees; P18,000 for SEC registration of share issued and P5,500 for printing of share certificates. Immediately after the business combinations, what is the…
SG Company's stockholders' equity as of December 31, 2019 is P7,308,000. On January 1, 2020, SG acquires 30% of Popsters Company's ordinary shares for P540,000 cash and by issuing its own shares with a fair value of P1,350,000. SG acquired significant influence over Popsters as a result of stock acquisition. After four months, SG purchases another 60% of Popsters' ordinary shares for a cash payment of P3,942,000. On this date, Popsters reports identifiable assets with carrying value of P6,480,000 and fair value of P11,520,000 and it has liabilities with a book value and fair value of P3,240,000. At the acquisition date, net loss reported by Popsters for the four-month ended amounted to P900,000. The fair value of the 10% non-controlling interest is P1,296,000. Non-controlling interest is valued using the proportionate basis. SG also paid the following: P90,000 for legal fees, P72,000 for finder's fees, P77,400 for accountant's fees, P64,800 for audit fee and P19,800 for printing of…
On January 1, 2021, Manette Company acquired 100,000 ordinary shares of Nette Company for P6,000,000. At the date of purchase, Nette had 500,000 outstanding ordinary shares and shareholders' equity of P20,000,000. During the year 2021, Nette reported profit of P1,000,000 and declared and paid cash dividends of P1.50 per share. The fair value of Nette's share at December 31, 2021 was P68. What amount shall Manette Company recognize in profit or loss for the year 2021 if it is able to exercise significant influence over Nette Company as a result of the acquisition? A P950,000 B) P200,000 P350,000 P150,000
SG Company’s stockholders’ equity as of December 31, 2019 is P7,308,000. On January 1, 2020, SG acquires 30% of Popsters Company’s ordinary shares for P540,000 cash and by issuing its own shares with a fair value of P1,350,000. SG acquired significant influence over Popsters as a result of stock acquisition. After four months, SG purchases another 60% of Popsters' ordinary shares for a cash payment of P3,942,000. On this date, Popsters reports identifiable assets with carrying value of P6,480,000 and fair value of P11,520,000 and it has liabilities with a book value and fair value of P3,240,000.At the acquisition date, net loss reported by Popsters for the four-month ended amounted to P900,000. The fair value of the 10% non-controlling interest is P1,296,000. Non-controlling interest is valued using the proportionate basis. SG also paid the following: P90,000 for legal fees, P72,000 for finder’s fees, P77,400 for accountant’s fees, P64,800 for audit fee and P19,800 for printing of…
Hades Company’s shareholders’ equity as of December 31, 2019 is P2,030,000. On January 1, 2020, Hades acquires 15% of Zeus Company’s ordinary share for P150,000 cash and by issuing its own shares with fair value of P200,000.The investment is accounted at FV thru PL. After three months, Hades purchases another 55% of Zeus’s ordinary share for cash payment of P1,100,000. On this date, Zeus reports identifiable assets with carrying value of P1,800,000 and fair value of P3,200,000 and it has liabilities with a book value and fair value of P900,000.. The fair value of 20% NCI is P360,000. NCI is valued using the FV basis. Hades also paid the following in connection to stock acquisitions of Hades: P65,000 for broker’s fee; P70,000 for pre-acquisition audit fee; P21,500 for legal fees; P18,000 for SEC registration of share issued and P5,500 for printing of share certificates. What is the NCI at acquisition date? • 600,000 • 300,000 • 900,000 • 690,000 • None of the above
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On December 31, 2020, Lea Company, an entity with no subsidiary, purchased 10,000 ordinary shares of Sun Valley Corporation at P150 per share. At the time of the purchase, Sun Valley has an outstanding 50,000 shares with a total shareholders' equity of P7,500,000. For the year 2021, Sun Valley reported profit of P3,000,000. On December 30, Lea received a cash dividend of P50 per share. Based only on the foregoing information, what is the investment carrying value at December 31, 2021? A P2,100,000 B P1,500,000 P1,600,000 (D) P2,600,000
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On December 31, 2020, Naengmyeon Company, an entity with no subsidiary, purchased 10,000 ordinary shares from Bibim Corp. at P150 per share. At the time of purchase, Bibim has an outstanding 50,000 shares with a total shareholders’ equity of P7,500,000. For the year 2021, Bibim reported a profit of P3,000,000. On December 30, 2021, Naengmyeon received a cash dividend of P50 per share. What is the carrying value of the investment at December 31, 2021? a. P1,600,000 b. P2,100,000 c. P1,500,000 d. P2,600,000
On January 1, 2019, Parent Company acquires 75% (750,000 ordinary shares) of Subsidiary Company for P7,500,000. During this time, the shares of the subsidiary are trading at P8 per share. Moreover, at the date of acquisition, the Subsidiary reports outstanding shares of P4,000,000 and the retained earnings is valued at P2,000,000 and the Subsidiary's inventories is understated by P100,000, equipment with a remaining 5-year life is understated by P600,000 and land is understated by P1,300,000. The Non-controlling interest is valued at P2,375,000 at this date. Parent and Subsidiary furthermore reports net income of P700,000 and P180,000 each respectively and declared dividends of P400,000 and P300,000 each respectively for 2019. What is the Non-controlling interest in net assets arising from the consolidation to be reported at the end of 2019 if the Non-controlling interest is stated at fair value? What is the net income of the Equity Holder's of the Parent to be reported in the…