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Problem A. P issued shares worth P2,550,000 for all shares of S.

P incurred
the following costs:
Professional fees P27,000
Cost of SEC registration 12,000
Cost of printing and issuance of stocks 3,000

Book value Fair Value


Current assists 1,000,000 1,100,000
Plant assets 1,500,000 2,200,000
Liabilities 300,000 300,000
Ordinary shares 2,000,000
Retained earnings 200,000

1. Compute APIC P1,335,000


2. Compute expense P27,000

Problem B. Princess paid the following relation to business combination:

Finder’s fee P50,000


Legal and accounting fee 50,000
Cost of stockholder’s meetings 20,000
SEC registration of business 15,0000
combination
General and administrative costs 15,000
Cost of listing of shares 10,000
Cost of printing stock certificate 10,000
Accounting fee related to stock issues 20,000
SEC registration 20,000
Underwriting costs 20,000

3. Compute the expenses


4. Compute the amount chargeable to APIC

Problem C. The Statement of Financial Position of Angela on June 30, 2017


shows total assets at P450,000 and liabilities at P87,500.

All the assets and the liabilities of Angela assumed to approximate their
fair values except for land and building. It is estimated that the fair
values of the land and building be increased by P130,000 and P80,000
respectively.

Papa Jerwin acquired 80% of Angela’s capital stock for P500,000.

5. Assuming the consideration paid includes control premium of P142,000, how


much is the goodwill/(gain of bargain purchase) on the consolidated
financial statement?

6. Assuming the consideration paid excludes control premium of P23,000 and


the fair value of the non-controlling interest is P122,750, how much is
the goodwill/(gain of bargain purchase) on the consolidated financial
statement?

7. Assuming the consideration paid includes control premium of P37,000, how


much is the goodwill/(gain of bargain purchase) on the consolidated
financial statement?

Problem D. K acquired 80% of L for P500,000. Land is undervalued by P130,000


and building by P80,000. Book value of L’s net assets is P362,500. A control
premium of P23,000 was paid. The FV of the NCI is at P122,750. Compute the
goodwill. P73,250

Problem E. Acquirer Corporation acquires 25% of Acquired Company’s common


stock for P190,000 cash and carries the investment using the cost method.
After three months, Parent purchases another 60% of Subsidiary’s common stock
for P540,000. On this date, acquired company reports identifiable net assets
with carrying value of P720,000 and fair value of P920,000. The liabilities
of the acquired company has a book value and a fair value of P280,000. The
fair value of the 15% non-controlling interest is P125,000.
8. How much is the goodwill or (gain on acquisition) P17,000

Problem F. X has 40% of its shares traded through PSE. Y purchased the 60%
non-traded share of X for P6,300,000. The Fair value of the 40% is at
P4,000,000. The Fair value of identifiable net asset and its carrying value
are P7,000,000 and P5,000,000, respectively.

9. Compute the goodwill. P3,300,000

Problem G. P purchased a 10% of S for P40,000 held as an FVTOCI. Additional


shares were purchased by P for P315,000. This brings P’s interest to 80%. The
BV of S’ net assets is at P340,000. An asset is undervalued by P50,000.
10. What is the goodwill? P60,000
11. What is the value of the NCI? P90,000