ON DATE OF BUSINESS COMBINATION: December 31, 2010

· 100% ownership by Post acquired for P 1.3 Million

· Fair Value & Carrying Value FV CV Excess
Inventories 526,000 500,000 26,000
Plant assets 1,290,000 1,100,000 190,000
Patent 30,000 30,000
1,846,000 1,600,000 246,000

SUBSEQUENT TO BUSINESS COMBINATION: December 31, 2011

· Dividends declared P40,000 on Nov. 24 & paid on Dec. 16
· Net income for the year P90,000
· Details of Diff bet Fair Value & Carrying Value
Inventories (FIFO) 26,000
Plant assets
Land 60,000
Building (econ life 20 years) 80,000
Machinery (econ life 5 years) 50,000 190,000
Patent (econ life 6 years) 30,000
Total 246,000

SUBSEQUENT TO BUSINESS COMBINATION: December 31, 2012

· Dividends declared P50,000 on Nov. 22 & paid on Dec. 17
· Net income for the year P105,000
 total investment in subsidiary
BV FV Goodwill
 Balance Sheet Post Sage
Assets Dr.
Cash 75,000.00 100,000.00 Dr.
Inventories 800,000.00 500,000.00 Dr.
Other current assets 542,250.00 215,000.00 Cr.
Investment in Sage Company CS 1,300,000.00
Plant assets 3,500,000.00 1,100,000.00
Patent
Goodwill
6,217,250.00 1,915,000.00
Liabilities & SHE
Liabilities (2,550,000.00) (946,000.00)
Common stock, P1 par (1,057,000.00)
Common stock, P10 par (400,000.00)
APIC (1,560,250.00) (235,000.00)
Retained Earnings (1,050,000.00) (334,000.00)

(6,217,250.00) (1,915,000.00)
WPEE 1 Balance Sheet Post
Common stock, P10 par 400,000 Assets
APIC 235,000 Cash 75,000.00
Retained Earnings 334,000 Inventories 800,000.00
Investment in Subsidiary 969,000 Other current assets 542,250.00
Investment in Sage Company CS 1,300,000.00
WPEE 2 Plant assets 3,500,000.00
Inventory 26,000 Patent
Plant 190,000 Goodwill
Patent 30,000 6,217,250.00
Investment in Subsidiary 246,000 Liabilities & SHE
Liabilities (2,550,000.00)
Goodwill Computation Common stock, P1 par (1,057,000.00)
1300000 AC Common stock, P10 par
969,000.00 APIC (1,560,250.00)
246000 Retained Earnings (1,050,000.00)
85,000.00 GW
(6,217,250.00)
WPEE 3
Goodwill 85,000.00
Investment in Subsidiary 85,000.00
 Sage WPEE 1 WPEE 2 WPEE 3 Consolidated

100,000.00 175,000.00
500,000.00 26,000 1,326,000.00
215,000.00 757,250.00
969,000 246,000 85,000.00 -
1,100,000.00 190,000 4,790,000.00
30,000 30,000.00
85,000.00 85,000.00
1,915,000.00 7,163,250.00

(946,000.00) (3,496,000.00)
(1,057,000.00)
(400,000.00) 400,000 -
(235,000.00) 235,000 (1,560,250.00)
(334,000.00) 334,000 (1,050,000.00)

(1,915,000.00) (7,163,250.00)
 Post Sage WPEE 1
Income Statement
Net sales (5,611,000.00) (1,089,000.00)
Cost of goods sold 3,925,000.00 700,000.00
Operating expenses 556,000.00 129,000.00
Other expenses 710,000.00 170,000.00
Dividend income (40,000.00)
Net income (460,000.00) (90,000.00)

Statement of Changes in Equity WPEE 1

RE, beg (1,050,000.00) (334,000.00) 334000
Net income (460,000.00) (90,000.00)
Dividends declared 158,550.00 40,000.00
RE, end (1,351,450.00) (384,000.00)

Balance Sheet WPEE 1

Assets
Inventories 861,000.00 439,000.00
Other current assets 639,000.00 371,000.00
Investment in Sage Company CS 1,300,000.00 -969000
Plant assets 3,600,000.00 1,150,000.00
Patent
Goodwill
Total assets 6,400,000.00 1,960,000.00

Liabilities & SE
Liabilities (2,431,300.00) (941,000.00)
Common stock, P 1 par (1,057,000.00)
Common stock, P 10 par (400,000.00) 400000
APIC (1,560,250.00) (235,000.00) 235000
Retained Earnings (1,351,450.00) (384,000.00)
Total liabilities & SE (6,400,000.00) (1,960,000.00)

1. Investment in Sage
WPEE 2.1
WPEE 2.2
2. Net Income
Just combine everything
3. Dividends 40000
Dividend Payment to Subsidiary In consolidation, zero dapat talaga.
Dividend Income for Parent
(separate FS)
4. WPEE 4
Cancellation of intercompany dividends
Dr. Dividend Income/Dividends 40000
CR. RE 40000

WPEE 2.1-2.2
COGS 26000
Inventory 26000

OPEX 14000
PPE 14000
CV UL
Buildling 80000 20 4000
Machinery 50000 5 10000
14000

Patent 30000 6 5000

OPEX 5000
Patent 5000
WPEE 2 WPEE 3 WPEE 4 WPEE 2.1

26000
19000

40,000.00
40,000.00 45000

WPEE 2 WPEE 3 WPEE 4 WPEE 2.1

(40,000.00)
(40,000.00)

WPEE 2 WPEE 3 WPEE 4 WPEE 2.1

26,000 -26000

(246,000) -85000
190,000 -14000
30,000 -5000
85000
Consolidated

(6,700,000.00)
4,651,000.00
704,000.00
880,000.00
-
(465,000.00)

Consolidated
(1,050,000.00)
(465,000.00)
158,550.00
(1,356,450.00)

Consolidated

1,300,000.00
1,010,000.00
-
4,926,000.00
25,000.00
85,000.00
7,346,000.00

(3,372,300.00)
(1,057,000.00)
-
(1,560,250.00)
(1,356,450.00)
(7,346,000.00)
 Post Sage WPEE 1
Income Statement
Net sales (5,464,750) (1,104,000)
Cost of goods sold 3,925,000 700,000
Operating expenses 556,000 129,000
Interest & income tax expense 710,000 170,000
Dividend income (50,000)
Net income (323,750) (105,000)

Statement of Changes in Equity WPEE 1

RE, beg (1,351,450) (384,000) 334,000
Net income (323,750) (105,000)
Dividends declared 158,550 50,000
RE, end (1,516,650) (439,000)

Balance Sheet
Assets WPEE 1
Inventories 861,000 439,000
Other current assets 801,700 426,000
Investment in Sage Company CS 1,300,000 (969,000)
Plant assets 3,600,000 1,150,000
Patent
Goodwill
Total assets 6,562,700 2,015,000

Liabilities & SHE

Liabilities (2,428,800) (941,000)
Common stock, P 1 par (1,057,000)
Common stock, P 10 par (400,000)
APIC (1,560,250) (235,000) 400,000
Retained Earnings (1,516,650) (439,000) 235,000

Total liabilities & SE (6,562,700) (2,015,000)

DEPRECIATION WPEE 2.2

Building 80,000 20 4,000
Machinery 50,000 5 10,000
130,000 14,000

Dr. RE Beg
Dr. OPEX
Cr. Plant Assets
(compound entry; assumed no recording was done in y

If Year 3
 Dr. RE Beg
Dr. OPEX
Cr. Plant Assets

Inventory WPEE 2.1

Dr. RE Beg 26,000
Cr. Inventory 26,000

WPEE 2.3
Dr. RE Beg 5,000
Dr. OPEX 5,000
Cr. Patent 10,000

Dividend for the period WPEE 4 Dividends prior to this period need not
Dr. Dividend 50,000
Cr. RE 50,000
 WPEE 2 WPEE 3 WPEE 4 WPEE 2.1 Consolidated

(6,568,750)
4,625,000
19,000 704,000
880,000
50,000 -
40,000 19,000 (359,750)

WPEE 2 WPEE 3 WPEE 4 WPEE 2.1 Consolidated

45,000 (1,356,450)
(359,750)
50,000 158,550
(1,557,650)

WPEE 2 WPEE 3 WPEE 4 WPEE 2.1 Consolidated

26,000 (26,000) 1,300,000
1,227,700
(246,000) (85,000) -
190,000 (28,000) 4,912,000
30,000 (10,000) 20,000
85,000 85,000
7,544,700

(3,369,800)
(1,057,000)

(1,560,250)
(1,557,650)
-
(7,544,700)

Year 1 Year 2
76,000 72,000
40,000 30,000
116,000 102,000
14,000 14,000
28,000
14,000
14,000
28,000
d no recording was done in year 1 following the acquisition)
 28,000
14,000
42,000

s prior to this period need not be recorded because the same do not create any impact; already reflected…
ON DATE OF BUSINESS COMBINATION: December 31, 2010
· 80% ownership by Post acquired for P 1.04 Million
· Fair Value & Carrying Value FV CV Excess
Inventories 526,000 500,000 26,000
Plant assets 1,290,000 1,100,000 190,000
Patent 30,000 30,000
1,846,000 1,600,000 246,000
· 20% Non Controlling Interest has FMV of 250,000

SUBSEQUENT TO BUSINESS COMBINATION: December 31, 2011

· Dividends declared P40,000 on Nov. 24 & paid on Dec. 16
· Net income for the year P90,000
· Details of Diff bet Fair Value & Carrying Value
Inventories (FIFO) 26,000
Plant assets
Land 60,000
Building (econ life 20 years) 80,000
Machinery (econ life 5 years) 50,000 190,000
Patent (econ life 6 years) 30,000
Total 246,000

SUBSEQUENT TO BUSINESS COMBINATION: December 31, 2012

· Dividends declared P50,000 on Nov. 22 & paid on Dec. 17
· Net income for the year P105,000
 Balance Sheet Post Sage WPEE 1
Assets
Cash 335,000.00 100,000.00
Inventories 800,000.00 500,000.00
Other current assets 542,250.00 215,000.00
Investment in Sage CS 1,040,000.00 (775,200)
Plant assets 3,500,000.00 1,100,000.00
Patent
Goodwill
6,217,250.00 1,915,000.00
Liabilities & SHE
Liabilities (2,550,000.00) (946,000.00)
Common stock, P1 par (1,057,000.00)
Common stock, P10 par (400,000.00) 400,000
APIC (1,560,250.00) (235,000.00) 235,000
Retained Earnings (1,050,000.00) (334,000.00) 334,000
Non-controlling interest (193,800)

(6,217,250.00) (1,915,000.00)

Post NCI Total

Total Acquisition Cost 1040000 250000 1290000
FMV of Net Identifiable Assets 972,000 243,000 1,215,000
68,000 7,000 75,000
Dr. Goodwill 75,000
Cr. Inv. in Sage 68,000
Cr. NCI Beg 7,000

FV of Net Identifiable Asset 1,215,000.00 972,000.00 243,000.00

WPEE 2 WPEE 3 Consolidated

435,000.00
26,000 1,326,000.00
757,250.00
(196,800) - 68,000.00 -
190,000 4,790,000.00
30,000 30,000.00
75,000.00 75,000.00
7,413,250.00

(3,496,000.00)
(1,057,000.00)
-
(1,560,250.00)
(1,050,000.00)
-49200 (7,000) (250,000.00)

(7,413,250.00)
 Post Sage WPEE 1
Income Statement
Net sales (5,611,000) (1,089,000)
Cost of goods sold 3,925,000 700,000
Operating expenses 556,000 129,000
Other expenses 710,000 170,000
Dividend income (32,000)
Net income (452,000) (90,000)

Allocation of Net Income

Parent (452,000) (72,000)
Non-controlling interest (18,000)

Statement of Changes in Equity Post Sage WPEE 1

RE, beg (1,050,000) (334,000) 334,000
Net income allocated to Parent shareholders (452,000) (90,000)
Dividends declared 158,550 40,000
RE, end (1,343,450) (384,000)

Non-controlling interest, beg (193,800)

Net income allocated to NCI
Dividends declared
Non-controlling interest, end

Balance Sheet WPEE 1

Assets
Inventories 861,000 439,000
Other current assets 891,000 371,000
Investment in Sage Company CS 1,040,000 (775,200)
Plant assets 3,600,000 1,150,000
Patent
Goodwill
Total assets 6,392,000 1,960,000

Liabilities & SE
Liabilities (2,431,300) (941,000)
Common stock, P 1 par (1,057,000)
Common stock, P 10 par (400,000) 400,000
APIC (1,560,250) (235,000) 235,000
Retained Earnings (1,343,450) (384,000)
Non-controlling interest
Total liabilities & SE (6,392,000) (1,960,000)
Reconciliation of NCI and SHE of Sage 0
Common Stock (400,000)
APIC (235,000)
RE (384,000)
(1,019,000) (203,800)
Unamortize excess of FMV over cost
Inventory -
Plant Assets (190,000) (38,000)
Patent (25,000) (5,000)
(1,234,000)
0
(246,800)
Goodwill, share of NCI (250,000) (250,000)
NCI (Equity), end (496,800) (496,800)

2.1 Entries 26,000

COGS 26,000
Inventory

2.2 OPEX 14,000

Plant 14,000

2.3 OPEX 5,000

Patent 50,000

4 Dividend Income 32,000

NCI 8,000 represents a real outflow
RE 40,000
WPEE 2 WPEE 3 WPEE 4 WPEE 2.1 Consolidated

(6,700,000)
26,000 4,651,000
19,000 704,000
880,000
32,000 -
32,000 45,000 (465,000)

32,000 36,000 (456,000)

9,000 (9,000)
(465,000)

WPEE 2 WPEE 3 WPEE 4 WPEE 2.1 Consolidated

(1,050,000)
(456,000)
(40,000) 158,550
(1,347,450)

(49,200) (7,000) (250,000)

(9,000)
8,000 8,000
(251,000)

WPEE 2 WPEE 3 WPEE 4 WPEE 2.1 Consolidated

26,000 (26,000) 1,300,000

1,262,000
(196,800) (68,000) -
190,000 (14,000) 4,926,000
30,000 (5,000) 25,000
75,000 75,000
7,588,000

(3,372,300)
(1,057,000)
-
(1,560,250)
(1,347,450)
(251,000)
(7,588,000)
 Post Sage WPEE 1
Income Statement
Net sales (5,464,750) (1,104,000)
Cost of goods sold 3,925,000 700,000
Operating expenses 556,000 129,000
Interest & income tax expense 710,000 170,000
Interco inv income (40,000)
Net income (313,750) (105,000)

Allocation of Net Income

Parent (313,750) (84,000)
Non-controlling interest (21,000)

Statement of Changes in Equity WPEE 1

RE, beg (1,343,450) (384,000) 334,000
Net income (313,750) (105,000)
Dividends declared 158,550 50,000
RE, end (1,498,650) (439,000)

Non-controlling interest, beg (193,800)

Net income allocated to NCI
Dividends declared
Non-controlling interest, end

Balance Sheet
Assets WPEE 1
Inventories 861,000 439,000
Other current assets 1,043,700 426,000
Investment in Sage Company CS 1,040,000 (775,200)
Plant assets 3,600,000 1,150,000
Patent
Goodwill
Total assets 6,544,700 2,015,000

Liabilities & SHE

Liabilities (2,428,800) (941,000)
Common stock, P 1 par (1,057,000)
Common stock, P 10 par (400,000) 400,000
APIC (1,560,250) (235,000) 235,000
Retained Earnings (1,498,650) (439,000)
Non-controlling interest
Total liabilities & SE (6,544,700) (2,015,000)

4 DIVIDENDS
 Dividend Income 40,000
NCI Dividends 10,000
RE 50,000

2.1 RE Beg 20,800

NCI Beg 5,200
Inventory 26,000

2.2 OPEX 14,000

NCI Beg 2,800
RE BEG 11,200
Plant 28,000

2.3 OPEX 5,000

NCI Beg 1,000
RE Beg 4,000
Patent 10,000

PARE B Post-acquisition Retained Earnings Balance

(384,000)
(334,000) find where sourced
50,000
40,000 Sa atin
10,000 NCI

RE Beg 10,000
NCI Beg 10,000
WPEE 2 WPEE 3 WPEE 4 PARE B WPEE 2.1

19,000

40,000
- 40,000 19,000

- 40,000 15,200
3,800

WPEE 2 WPEE 3 WPEE 4 PARE B WPEE 2.1

10,000 36,000

(49,200) (7,000) (10,000) 9,000

10,000

WPEE 2 WPEE 3 WPEE 4 PARE B WPEE 2.1

26,000 (26,000)

(196,800) (68,000)
190,000 (28,000)
30,000 (10,000)
75,000
Consolidated

(6,568,750)
4,625,000
704,000
880,000
-
(359,750)

(342,550)
(17,200)
(359,750)

Consolidated
(1,347,450)
(342,550)
158,550
(1,531,450)

(251,000)
(17,200)
10,000
(258,200)

Consolidated
1,300,000
1,469,700
-
4,912,000
20,000
75,000
7,776,700

(3,369,800)
(1,057,000)
-
(1,560,250)
(1,531,450)
(258,200)
(7,776,700)