Transferring of Consideration

7/21/2019 Transferring of Consideration

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Chapter 14Problem I1. Consideration transferred : FMV of shares issued by Robin (80,000 sh × P28)

P2,2!0,000

2. Consideration trasnferred P2,2!0,000

"ess: Fair #a$ue of %o&e's net assets (P2,20,000P200,000*P1,200,000) 1,20,000 +oodi$$ P -20,000

Problem II1.. //ounts Re/ei#ab$e 180,000

n#entory !00,000"and -0,000ui$din 30,00045ui&6ent 0,000Patent 20,000+oodi$$ 10,000/5uisition 47&ense 20,000

Current "iabi$ities 0,000"onter6 9ebt 130,000Cash -80,000 Consideration trasnsferred : Cash P-30,000 "ess : Fair #a$ue of est's net assets

(P180,000 P!00,000 P-0,000 P30,000 P P0,000 P20,000 * P0,000 P130,000) --0,000

+oodi$$ P 10,000

2. /5uisition 47&ense 20,000 //ounts Re/ei#ab$e 180,000

n#entory !00,000"and -0,000ui$din 30,00045ui&6ent 0,000Patent 20,000

Current "iabi$ities 0,000"onter6 9ebt 130,000Cash -20,000+ain on /5uisition -0,000

Consideration trasnsferred : Cash P-00,000 "ess : Fair #a$ue of est's net assets

(P180,000 P!00,000 P-0,000 P30,000 P P0,000 P20,000 * P0,000 P130,000) --0,000

arain Pur/hase +ain (P -0,000)

Problem III//ounts Re/ei#ab$e 2;1,000n#entory ;;0,000"and --0,000ui$dins and 45ui&6ent 1,1!!,00

0+oodi$$ 8!8,000



$$oan/e for <n/o$$e/tib$e //ounts (P2;1,000 P1=8,000)

;;,000

Current "iabi$ities 2-,000onds Payab$e !-0,000Pre6iu6 on onds Payab$e (P!=-,000 P!-0,000) !-,000Preferred >to/? (1-,000 7 P100) 1,-00,000

Co66on >to/? (;0,000 7 P10) ;00,000@ther Contributed Ca&ita$ (P2- P10) 7 ;0,000 !-0,000Cash -0,000

Consideration transferred: (P1,-00,000 P-0,000 P-0,000) P2,;00,000

"ess: Fair #a$ue of net assets (1=8,000 ;;0,000

--0,000 1,1!!,000 * 2-,000 * !=-,000) 1,!-2,000

+oodi$$ P 8!8,000

Problem IVCurrent ssets =30,000P$ant and 45ui&6ent 1,!!0,000+oodi$$ ;;3,000

"iabi$ities 213,000Cash 2,130,00

04sti6ated "iabi$ity for Continent Consideration ;30,000

Problem V Ahe a6ount of the /ontinen/y is P-00,000 (10,000 shares at P-0 &er share)

1. +oodi$$ -00,000PaidinCa&ita$ for Continent Consideration

ssuab$e-00,000

2. PaidinCa&ita$ for Continent Consideration * ssuab$e -00,000Co66on >to/? (P10 &ar) 100,000

PaidnCa&ita$ in 47/ess of Par !00,000 P$atB Co6&any does not adust the oriina$ a6ount re/orded as e5uity.

Problem VI1. Danuary 1, 207!

//ounts Re/ei#ab$e 2,000n#entory ==,000

"and 132,000ui$dins !-0,00045ui&6ent 288,000+oodi$$ -!,000

$$oan/e for <n/o$$e/tib$e //ounts ,000//ounts Payab$e 8;,000Eote Payab$e 180,00

0Cash 20,00



0 4sti6ated "iabi$ity for Continent Consideration 1;-,00

0

Consideration transferred (P20,000 P1;-,000) P8--,000 Aota$ fair #a$ue of net assets a/5uired (P1,03!,000 P23;,000) 801,000+oodi$$ P -!,000

2. Danuary 2, 20734sti6ated "iabi$ity for Continent Consideration 1;-,000

Cash 1;-,000

;. Danuary 2, 20734sti6ated "iabi$ity for Continent Consideration 1;-,000

+ain on Continent Consideration 1;-,000

Problem VII

1. //ounts Re/ei#ab$e 2!0,000n#entory ;20,000"and 1,-08,000ui$dins 1,;=2,000+oodi$$ ;0,000

$$oan/e for <n/o$$e/tib$e //ounts 20,000//ounts Payab$e 20,000Eote Payab$e 300,000Cash 2,300,000

+oodi$$ 200,0004sti6ated "iabi$ity for Continent Consideration 200,000

Consideration transferred P2,300,000Fair #a$ue of net assets a/5uired(P;,!!0,000 * P80,000) 2,-0,000

+oodi$$ P ;0,000

2. 4sti6ated "iabi$ity for Continent Consideration 200,000+ain on Continent Consideration 200,000

Problem VIII

Current ssets ;32,000"onter6 ssets (P1,8=0,000 P20,000) (P=8,000 P-,000) 2,01;,000

+oodi$$ ;=-,000"iabi$ities 11=,000"onter6 9ebt !=1,000Co66on >to/? (1!!,000 × P-) 20,000

@ther Contributed Ca&ita$ (1!!,000 7 P1- P-)) 1,!!0,000

(1!!,000 × P1-) * GP;32,000 P2,01;,000 * (P11=,000 P!=1,000)H P;=-,000

Aota$ shares issued (P00,000 I P-) P20,000 I P-) 1!!,000



Fair #a$ue of sto/? issued (1!!,000 × P1-) P2,130,000

Problem IX

Case A

Consideration transferred P1;0,000

"ess: Fair Va$ue of Eet ssets 120,000+oodi$$ P 10,000

Case BConsideration transferred P110,000"ess: Fair Va$ue of Eet ssets =0,000+oodi$$ P 20,000

Case CConsideration transferred P1-,000"ess: Fair Va$ue of Eet ssets 20,000

+ain (P -,000)

ssets "iabi$ities Retained4arnins(+ain)

+oodi$$ Current ssets "on"i#ed ssets

Case P10,000

P20,000

P1;0,000

P;0,000 0

Case 20,000 ;0,000 80,000 20,000 0Case C 0 20,000 !0,000 !0,000 -,000

Problem X

1. Fair Va$ue of dentiJab$e Eet ssetsoo? #a$ues P-00,000 * P100,000 P!00,000rite u& of n#entory and 45ui&6ent:

(P20,000 P;0,000) -0,000Consideration transferred abo#e hi/h oodi$$ ou$d resu$t P!-0,000

2. 45ui&6ent ou$d not be ritten don, reard$ess of the &ur/hase &ri/e, un$ess it asre#ieed and deter6ined to be o#er#a$ued oriina$$y.

;. ain ou$d be shon if the &ur/hase &ri/e as be$o P!-0,000.!. nythin be$o P!-0,000 is te/hni/a$$y /onsidered a barain.-. +oodi$$ ou$d be P-0,000 at a &ur/hase &ri/e of P-00,000 or (P!-0,000 P-0,000).

Problem XI

Present #a$ue of 6aturity #a$ue, 20 &eriods K 3L: 0.;118 7 P300,000 P18,080

Present #a$ue of interest annuity, 20 &eriods K 3L: 11.!3==2 7 ;0,000 ;!!,0=8

Aota$ Present #a$ue -;1,18Par #a$ue 300,0009is/ount on bonds &ayab$e P38,822



Cash 11!,000//ounts Re/ei#ab$e 1;-,000n#entory ;10,000"and ;1-,000ui$dins -!,=0045ui&6ent ;=,!-0

ond 9is/ount (P!0,000 P38,822) 108,822Current "iabi$ities =-,;00onds Payab$e (P;00,000 P300,000) =00,000

+ain on /5uisition of >ta$ton (ordinary) 81,82

Co6&utation of 47/ess of Eet ssets Re/ei#ed @#er Cost

Consideration transferred (P-;1,18 &$us $iabi$ities assu6ed of P=-,;00

and P230,000) P883,!8

"ess: Aota$ fair #a$ue of assets re/ei#ed P=38,;-0 47/ess of fair #a$ue of net assets o#er /ost (P 81,82)

Problem XII

n a//ountin for the /o6bination of EA and @A+, the fair #a$ue of the a/5uisition is

a$$o/ated to ea/h identiJab$e asset and $iabi$ity a/5uired ith any re6ainin e7/ess

attributed to oodi$$.

Consideration transferred (shares issued) P-0,000Fair #a$ue of net assets a/5uired:

Cash P2=,000Re/ei#ab$es 3;,000

Arade6ar?s 22-,000Re/ord 6usi/ /ata$o 180,000n&ro/ess R9 200,00045ui&6ent 10-,000//ounts &ayab$e (;!,000)Eotes &ayab$e (!-,000) 2;,000+oodi$$ P2,000

4ntry by EA to re/ord /o6bination ith @A+:Cash 2=,000Re/ei#ab$es 3;,000

Arade6ar?s 22-,000Re/ord Musi/ Cata$o 180,000Ca&ita$iBed R9 200,00045ui&6ent 10-,000+oodi$$ 2,000

//ounts Payab$e ;!,000Eotes Payab$e !-,000Co66on >to/? (EeAune &ar #a$ue) 30,000dditiona$ Paidin Ca&ita$ 3=0,000

(Ao re/ord 6erer ith @A+ at fair #a$ue)

dditiona$ Paidin Ca&ita$ 2-,000



Cash 2-,000(>to/? issue /osts in/urred)

Post-Combination Balance Sheet:

ssets "iabi$ities and @ners' 45uity

Cash P 3!,000 //ounts &ayab$e P 1!!,000Re/ei#ab$es 21;,000 Eotes &ayab$e !1-,000 Arade6ar?s 32-,000Re/ord 6usi/ /ata$o 1,020,000Ca&ita$iBed R9 200,000 Co66on sto/? !30,00045ui&6ent !2-,000 dditiona$ &aidin /a&ita$ 3=-,000+oodi$$ 2,000 Retained earnins 830,000 Aota$ P 2,-!,000 Aota$ P 2,-!,000

Problem XIII>to/?ho$ders' 45uity:

Co66on >to/?, P1 &ar P1,100,000 @ther Contributed Ca&ita$ !,0=0,000 GP2,800,000 (100,000 7 P1;) *

P10,000H Retained 4arnins 300,000 Aota$ sto/?ho$ders' 45uity P -,=0,000

Problem XIV4ntry to re/ord the a/5uisition on Pa/iJ/a's re/ords:

Cash 8-,000Re/ei#ab$es and in#entory 180,000PP4 300,000

Arade6ar?s 200,000PR9 100,000+oodi$$ ,-00

"iabi$ities 180,000 Co66on >to/? (-0,000 7 P-) 2-0,000dditiona$ Paidn Ca&ita$ (-0,000 7 P1-) -0,000Continent &erfor6an/e ob$iation 32,-00

Ahe oodi$$ is /o6&uted as:Consideration transferred: -0,000 shares 7 P20 P1,000,000Continent /onsideration: P1;0,000 &ay6ent 7 -0L &robabi$ity 7 0.=31-;8 32,-00

Aota$ P1,032,-00 "ess: Fair #a$ue of net assets a/5uired (P8-,000 P180,000 P300,000 P200,000

P100,000 P180,000) =8-,000 +oodi$$ P ,-00

/5uisition e7&enses 1-,000Cash 1-,000

PC =,000Cash =,000

Eote: Ahe fo$$oin a6ounts i$$ a&&ear in the in/o6e state6ent and state6ent of retainedearnins after business /o6bination:



PP n/.

Re#enues (1,200,000)

47&enses (P8-,000 P1-,000) 8=0,000

Eet in/o6e (;10,000)

Retained earnins, 1I1 (=-0,000)

Eet in/o6e (;10,000)

9i#idends &aid =0,000Retained earnins, 12I;1 (1,10,000) or, P1,18-,000 * P1-,000 P1,10,000

Problem XV/5uisition MethodN4ntry to re/ord a/5uisition of >a6&ras

Consideration transferred P;00,000Continent &erfor6an/e ob$iation 1-,000Consideration transferred (fair #a$ue) ;1-,000Fair #a$ue of net identiJab$e assets 282,000

+oodi$$ P;;,000

Re/ei#ab$es 80,000n#entory 0,000ui$dins 11-,00045ui&6ent 2-,000Custo6er $ist 22,000PR9 ;0,000+oodi$$ ;;,000

Current $iabi$ities 10,000 "onter6 $iabi$ities -0,000

Continent &erfor6an/e $iabi$ity 1-,000 Cash ;00,000

/5uisition e7&enses 10,000Cash 10,000

Problem XVI1. a. Ahe /o6&utation of oodi$$ is as fo$$os:

Consideration transferredO Co66on shares: ;0,000 shares 7 P2- P

-0,000 Eotes &ayab$e 180,000 Continent /onsideration (/ash/ontinen/y):

P120,000 7 ;0L &robabi$ity

;3,00

0 Aota$ P =33,000"ess: Fair #a$ue of identiJab$e assets a/5uiredand

$iabi$ities assu6ed: Cash P 2!,000 Re/ei#ab$es * net !8,000 n#entories 2,000 "and 2!0,000



ui$dins * net ;30,000 45ui&6ent * net ;00,000 n&ro/ess resear/h and de#e$o&6ent 30,000 //ounts &ayab$e ( 2,000) @ther $iabi$ities ( 138,000) 83!,000Positi#e 47/ess +oodi$$ P

102,000

b. Ahe ourna$ entries by Peter Cor&oration to re/ord the a/5uisition is as fo$$os:

Cash 2!,000Re/ei#ab$es * net !8,000n#entories 2,000"and 2!0,000ui$dins * net ;30,00045ui&6ent * net ;00,000n&ro/ess resear/h and de#e$o&6ent 30,000+oodi$$ 102,000 //ounts &ayab$e 32,000

@ther $iabi$ities 138,000 Eotes &ayab$e 180,000 4sti6ated "iabi$ity for ContinentConsideration

;3,000

Co66on sto/? (P10 &ar 7 ;0,000 shares) ;00,000 Paidin /a&ita$ in e7/ess of &ar

G(P2- * P10) 7 ;0,000 sharesH !-0,000 Acquisition of Saul Company.

/5uisitionre$ated e7&enses 8,000 Cash 8,000 Acquisition related costs – direct costs.

Paidin /a&ita$ in e7/ess of &ar ;2,!00 Cash ;2,!00 Acquisition related costs – costs to issue andregister stocks.

/5uisitionre$ated e7&enses 2,300 Cash 2,300 Acquisition related costs – indirect costs.

/. Ahe ba$an/e sheet of Pure Cor&oration i66ediate$y after the a/5uisition is as fo$$os:

Pure Cor&oration

a$an/e >heet9e/e6ber ;1, 207!

ssetsCash P 132,000Re/ei#ab$es * net 1!!,000n#entories ;30,000"and ;!8,000ui$dins * net 8!0,000



45ui&6ent * net ;2,000n&ro/ess resear/h and de#e$o&6ent 30,000+oodi$$ 102,00

0 Aota$ ssets P2,!8,000

"iabi$ities and >to/?ho$ders' 45uity"iabi$ities //ounts &ayab$e P 288,000 @ther $iabi$ities !08,000 Eotes &ayab$e 180,000 4sti6ated $iabi$ity for /ontinent/onsideration

;3,000

Aota$ "iabi$ities P =12,000>to/?ho$ders' 45uity Co66on sto/?, P10 &ar P

1,020,000 Paidin /a&ita$ in e7/ess of &ar1 3-,300 Retained earnins2 1-8,!00

Aota$ >to/?ho$ders' 45uity P1,8;3,000 Aota$ "iabi$ities and >to/?ho$ders' 45uity P2,!8,000

P!"#$### % P""&$"## – P'!$"##! P!&"$### - P()$### – P!($&##

*t should be noted that under P+,S '$ in-process , is measured and recorded at fair /alue as an asset onthe acquisition date. 0his requirement does not e1tend to , in conte1ts other than business combinations.

2.a. ssets that ha#e been &ro#isiona$$y re/orded as of the a/5uisition date are

retros&e/ti#e$y adusted in #a$ue durin the 6easure6ent &eriod for ne infor6ationthat /$ariJes the a/5uisitiondate #a$ue. Ahe adust6ents ae/t oodi$$ sin/e the6easure6ent &eriod is sti$$ ithin one year (i.e., eiht 6onths) fro6 the a/5uisition

date. Aherefore, the oodi$$ to be re&orted then on the a/5uisition shou$d be P8,000(P102,000 * P2!,000).

b.ui$dins 2!,000 +oodi$$ 2!,000 Ad2ustment to good3ill due to measurement date.

;.a. Ahe oodi$$ to be re&orted then on the a/5uisition shou$d be P123,000 (P102,000

P2!,000).

b. Ahe adust6ent is sti$$ ithin the 6easure6ent &eriod, the entry to adust the $iabi$ityou$d be:+oodi$$ 2!,000 4sti6ated $iabi$ity for /ontinent/onsideration

2!,000

Ad2ustment to good3ill due to measurement date.

/./.1. Ahe oodi$$ re6ains at P123,000, sin/e the /hane of esti6ate shou$d be done

on$y on/e ($ast uust ;1, 207-).



/.2. @n Eo#e6ber 1, 207-, the &robabi$ity #a$ue of the /ontinent /onsiderationa6ounted to P!8,000, the entry to adust the $iabi$ity ou$d be:

4sti6ated $iabi$ity for /ontinent /onsideration 12,000 +ain on esti6ated /ontinent /onsideration 12,000 Ad2ustment after measurement date.

n this /ase, the 6easurement period ends at the earlier of:• one year fro6 the a/5uisition date, or

• the date hen the a/5uirer re/ei#es needed infor6ation about fa/ts and/ir/u6stan/es (or $earns that the infor6ation is unobtainab$e) to /onsu66atethe a/5uisition.

/.;. /.;.1. Ahe oodi$$ re6ains at P123,000, sin/e the /hane of esti6ate shou$d be

done on$y on/e ($ast uust ;1, 207-).

/.;.2. @n 9e/e6ber 1-, 207-, the entry ou$d be:

"oss on esti6ated $iabi$ity /ontinent/onsideration

;0,000

4sti6ated $iabi$ity for /ontinent/onsideration

;0,000

Ad2ustment after measurement date.

/.;.;./.;.;.1. P123,000.

/.;.;.2. @n Danuary 1, 207, >au$'s a#erae in/o6e in 207- is P20,000and 2073 is P230,000, hi/h 6eans that the taret is 6et, Peter

Cor&oration i$$ 6a?e the fo$$oin entry:

4sti6ated $iabi$ity for /ontinent /onsideration 8,000"oss on esti6ated /ontinent /onsideration !2,000 Cash 120,000 Settlement of contingent consideration.

! .a. Ahe a6ount of oodi$$ on a/5uisition i$$ be re/o6&uted as fo$$os:

Consideration transferredO Co66on shares: ;0,000 shares 7 P2- P -0,000 Eotes &ayab$e 180,000

Continent /onsideration (/ash /ontinen/y): P120,000 7 ;-L &robabi$ity 7 (1IG1 .0!H) !0,;8- Aota$ P =0,;8-"ess: Fair #a$ue of identiJab$e assets a/5uired and

$iabi$ities assu6ed (refer to 1a abo#e) 83!,000+oodi$$ P 103,;8-

b. Ahe ourna$ entries by Pure Cor&oration to re/ord the a/5uisition is as fo$$os:Cash 2!,000



Re/ei#ab$es * net !8,000n#entories 2,000"and 2!0,000ui$dins * net ;30,00045ui&6ent * net ;00,000n&ro/ess resear/h and de#e$o&6ent 30,000

+oodi$$ 103,;83 //ounts &ayab$e 32,000 @ther $iabi$ities 138,000 Eotes &ayab$e 180,000 4sti6ated "iabi$ity for ContinentConsideration

!0,;8-

Co66on sto/? (P10 &ar 7 ;0,000 shares) ;00,000 Paidin /a&ita$ in e7/ess of &ar G(P2- * P10) 7 ;0,000 sharesH !-0,000

/.

/.1. +oodi$$ re6ains at P103,;8-. /.2. Ahe entry for Pure Cor&oration on 9e/e6ber ;1, 207- to re/ord su/h o//urren/e

ou$d be:

4sti6ated $iabi$ity for /ontinent /onsideration !0,;8- +ain on esti6ated /ontinent /onsideration !0,;8- Ad2ustment after measurement date.

>in/e the /ontinent e#ent does not ha&&en, the &osition ta?en by PFR> ; is thatthe /onditions that &re#ent the taret fro6 bein 6et o//urred in a subse5uent&eriod and that Peter had the infor6ation to 6easure the $iabi$ity at the a/5uisitiondate based on /ir/u6stan/es that e7isted at that ti6e. Ahus the adust6ent i$$Qo throuh in/o6e state6ent in the subse5uent &eriod.

d. Ahe entry by Peter Cor&oration on Danuary 1, 207 for the &ay6ent of the /ontinent

/onsideration ou$d be:

4sti6ated $iabi$ity for /ontinent /onsideration ;3,000"oss on esti6ated /ontinent /onsideration 33,000 Cash G(P8,000 P8!,000)I2 * P;0,000H 7 2 102,000 >ett$e6ent of /ontinent /onsideration.

-.a. Ahe a6ount of oodi$$ on a/5uisition i$$ be re/o6&uted as fo$$os:

Consideration transferredO Co66on shares: ;0,000 shares 7 P2- P

-0,000 Eotes &ayab$e 180,000

Continent /onsideration (/ash/ontinen/y): P120,000 7 ;0L &robabi$ity

;3,000

Continent /onsideration (sto/?/ontinen/y)

18,000

Aota$ P =8!,000"ess: Fair #a$ue of identiJab$e assets a/5uiredand

$iabi$ities assu6ed (refer to 1a abo#e) 83!,000



Positi#e 47/ess * +oodi$$ P 120,000

b. Ahe ourna$ entries by Pure Cor&oration to re/ord the a/5uisition is as fo$$os:Cash 2!,000Re/ei#ab$es * net !8,000n#entories 2,000

"and 2!0,000ui$dins * net ;30,00045ui&6ent * net ;00,000n&ro/ess resear/h and de#e$o&6ent 30,000+oodi$$ 120,000 //ounts &ayab$e 2,000 @ther $iabi$ities 138,000 Eotes &ayab$e 180,000 4sti6ated "iabi$ity for ContinentConsideration

;3,000

Paidin /a&ita$ for Continent Consideration 18,000

Co66on sto/? (P10 &ar 7 ;0,000 shares) ;00,000

dditiona$ &aidin /a&ita$ G(P2- * P10) 7;0,000 sharesH

!-0,000

Acquisition of Saul Company.

/. Pure Cor&oration i$$ 6a?e the fo$$oin entry for the issuan/e of 1,200 additiona$shares:

Paidin /a&ita$ for Continent Consideration 18,000 Co66on sto/? (P10 &ar 7 1,200 shares) 12,000 Paidin /a&ita$ in e7/ess of &ar 3,000 Settlement of contingent consideration.

3. @n Danuary 1, 207, the a#erae in/o6e a6ounted to P1;2,000 (the /ontinent e#ento//urs). Ahus, the entry re/ord the o//urren/e of su/h e#ent to reassin the P-0,000

oriina$ /onsideration to ;3,000 shares (;0,000 oriina$ shares issued 3,000 additiona$shares due to /ontinen/y) ou$d be:

Paidin /a&ita$ in e7/ess of &ar 30,000 Co66on sto/? (P10 &ar 7 3,000 shares) 30,000 Sett lement of contingent consideration.

. @n Danuary 1, 207, the /ontinent e#ent ha&&ens sin/e the fair #a$ue &er share fa$$be$o P2-. Ahus, the entry re/ord the o//urren/e of su/h e#ent to reassin the P-0,000oriina$ /onsideration to ;,-00 shares (;0,000 oriina$ shares issued ,-00additiona$ shares due to /ontinen/y) ou$d be:

Paidin /a&ita$ in e7/ess of &ar -,000

Co66on sto/? (P10 &ar 7 ,-00 shares) -,000 Settlement of contingent consideration.

9eJ/ien/y: (P2- * P20) 7 2-,000 shares issued to a/5uire..P1-0,000 9i#ide by fair #a$ue &er share on Danuary 1, 207.P 20 dded nu6ber of shares to issue. ,-00

8. Ahe a6ount of oodi$$ on a/5uisition i$$ be re/o6&uted as fo$$os:Consideration transferredO Co66on shares: ;0,000 shares 7 P2- P -0,000



Eotes &ayab$e 180,000 Continent /onsideration (sto/? /ontinen/y): G(P-0,000 * P-10,000) 7 !0L &robabi$ity

7 (1IG1 .0!H) =2,;08 Aota$ P1,022,;08"ess: Fair #a$ue of identiJab$e assets a/5uired and

$iabi$ities assu6ed (refer to 1a abo#e) 83!,000Positi#e 47/ess * +oodi$$ P 1-8,;08 4 present /alue of P 5 "6 for one period.

Ahe ourna$ entries by Pure Cor&oration to re/ord the a/5uisition is as fo$$os:Cash 2!,000Re/ei#ab$es * net !8,000n#entories 2,000"and 2!0,000ui$dins * net ;30,00045ui&6ent * net ;00,000n&ro/ess resear/h and de#e$o&6ent 30,000+oodi$$ 1-8,;08

//ounts &ayab$e 32,000 @ther $iabi$ities 138,000 Eotes &ayab$e 180,000 Paidin /a&ita$ for Continent Consideration =2,;08 Co66on sto/? (P10 &ar 7 2-,000 shares) ;00,000 Paidin /a&ita$ in e7/ess of &ar G(P2- * P10) 7 ;0,000 sharesH !-0,000

@n 9e/e6ber ;1, 207-, the /ontinent e#ent o//urs, herein Peter's sto/? &ri/e hadfa$$en to P20, thus re5uirin Peter to issue additiona$ shares of sto/? to the for6er onersof >au$ Cor&oration. Ahe entry for Peter Cor&oration on 9e/e6ber ;1, 207- to re/ord su/ho//urren/e su/h e#ent to reassin the P-0,000 oriina$ /onsideration to ;,-00 shares(;0,000 oriina$ shares issued ,-00 additiona$ shares due to /ontinen/y) ou$d be:

Paidin /a&ita$ for Continent Consideration =2,;08 Co66on sto/?, P10 &ar -,000 Paidin /a&ita$ in e7/ess of &ar 1,;08 Settlement of contingent consideration.

9eJ/ien/y: (P2- * P20) 7 ;0,000 shares issued to a/5uire....P1-0,000 9i#ide by fair #a$ue &er share on 9e/e6ber ;1, 207-P 20 dded nu6ber of shares to issue ,-00

Problem XVII1. Ahe /o6&utation of barain &ur/hase ain is as fo$$os:

Consideration transferredO Cash P 1,800,000

Co66on shares: 120,000 shares 7 P12 1,!!0,000 Costs of $i5uidation 12,000 Patent 2!0,000 Continent /onsideration (P12,000 uarantee

P1!,!00 to #endors) 23,!00 Aota$ P;,-18,!00"ess: Fair #a$ue of identiJab$e assets a/5uired and

$iabi$ities assu6ed: Mer/handise in#entory P1,!!0,00



0 //ounts re/ei#ab$e =00,000 Co&yrihts 2!0,000 45ui&6ent 1.;80,000 //ounts &ayab$e ( ;00,000

)

"oan &ayab$e ( 120,000) ;,-!0,000Eeati#e 47/ess * arain Pur/hase +ain P ( 21,300)

2. Ahe ourna$ entries by Ponder Cor&oration to re/ord the a/5uisition is as fo$$os:Mer/handise in#entory 1,!!0,000//ounts re/ei#ab$e =00,000Patent 2!0,00045ui&6ent 1,;80,000 //ounts &ayab$e ;00,000

"oan &ayab$e 120,000 Cash 1,812,000 Co66on sto/? (P10 &ar 7 120,000 shares) 1,200,000 Paidin /a&ita$ in e7/ess of &ar

G(P12 * P10) 7 120,000 sharesH 2!0,000 +ain on sa$e of Patent 2!0,000 4sti6ated $iabi$ity for /ontinent /onsideration 23,!00 arain &ur/hase ain 21,300

Problem XVIII1.

Consideration transferred:>hares: 2I; 7 30,000 7 P;.20 128,000Cash

//ounts &ayab$e !-,100Mortae and interest !!,0009ebentures and &re6iu6 -2,-00"i5uidation e7&enses 2 ,!00

1!!,000Cash he$d (12 ,000) 1;2 ,000

230 ,0007ess: +air /alue of assets and liabilities acquired:

//ounts re/ei#ab$e P;!,00n#entory ;=,000Freeho$d $and 1;0,000ui$dins !0,000P$ant and e5ui&6ent !3 ,000 28=,00

arain Pur/hase +ain 2=,00

Homer Ltd

//ounts Re/ei#ab$e ;!,00n#entory ;=,000Freeho$d "and 1;0,000ui$dins !0,000P$ant and 45ui&6ent !3,000

Payab$e to Aan "td 1;2,000Co66on sto/?, P1 &ar 7 !0,000 shares !0,000dditiona$ &aidin /a&ita$ 88,000+ain on a/5uisition 2=,00



(/5uisition of net assets of Aan "td and shares issued)

Payab$e to Aan "td 1;2,000Cash 1;2,000

(ein &ay6ent of /ash /onsideration)

Paidin /a&ita$ in e7/ess of &ar 1,200Cash 1,200

(ein /osts of issuin shares)



2.Tan LTD

General Ledger"i5uidation

P P//ounts Re/ei#ab$e ;!,00 dditiona$ &aid in /a&ita$ 23,800

n#entory 2,300 Retained earnins ;2,000Freeho$d "and 100,000 Re/ei#ab$e fro6 %o6er "td 230,000ui$dins ;0,000P$ant and 45ui&6ent !3,000+oodi$$ 2,000nterest Payab$e !,000"i5uidation 47&enses 2,!00Pre6iu6 on 9ebentures 2,-00//ounts Payab$e 1,300>hareho$ders' 9istribution 38,000

;18,800 ;18,800

"i5uidator's Cash

P P@&enin a$an/e 12,000 "i5uidation 47&enses 2,!00Re/ei#ab$e fro6 %o6er "td 1;2,000 Mortae and nterest !!,000

9ebentures and Pre6iu6 -2,-00//ounts Payab$e !-,100

1!!,000 1!!,000

>hareho$ders' 9istribution

P P>hares in %o6er "td 128,000 Co66on sto/? 30,000

"i5uidation 38,0000

128,000 128,000

Problem XIXCash 20,000//ounts Re/ei#ab$e 112,000n#entory 1;!,000"and --,000P$ant ssets !3;,0009is/ount on onds Payab$e 20,000+oodi$$ 12,200

$$oan/e for <n/o$$e/tib$e //ounts 10,000//ounts Payab$e -!,000onds Payab$e 200,0009eferred n/o6e Aa7 "iabi$ity 3,200Cash 300,000

Consideration transferred P300,000"ess: Fair #a$ue of net assets a/5uired

(P8!,000 * P10,000 * P-!,000 * P180,000 P3,200) !2,800 +oodi$$ P12,200



n/rease in net assets n/rease in#entory, $and, and &$ant assets to fair #a$ue

P-2,000 P2-,000 P1,000) P1!8,000 9e/rease bonds &ayab$e to fair #a$ue ( 20,000) n/rease in net assets P138,000 4stab$ish deferred in/o6e ta7 $iabi$ity (P138,000 7 !0L) P 3,200

Multple Cho!e Problems1. /

Finder's fees.P !0,000"ea$ fees. 1;,000

Aota$ e7&enses. P-;,000

Acquisition-related costs. Acquisition-related costs are costs the acquirer incurs toe8ect a business combination. 0hose costs include 9nders fee; ad/isory$ legal$accounting$ /aluation and other professional or consulting fees; generaladministrati/e costs$ including the costs of maintaining an internal acquisitionsdepartment; and costs of registering and issuing debt and equity securities. <nderP+,S ' =!##)>$ the acquirer is required to recogni?e acquisition-related costs asexpenses in the periods in 3hich the costs are incurred and the ser/ices arerecei/ed$ with one exception$ i.e. the costs to issue debt or equity securities are recogni?ed in accordance 3ith PAS '! =for equity> and PAS '@ =for debt>.

2. b * refer to Eo. 1 for further dis/ussion.udit fees re$ated to sto/? issuan/eP 10,000>to/? reistration fees...... -,000>to/? $istin fees......... !,000

P1=,000;. b

Consideration transferred (fair #a$ue).. P80,000"ess: Fair #a$ue of net identi9able assets a/5uired:

Fair #a$ue of assets P =8,000 "ess: Present #a$ueI Fair Va$ue of $iabi$ities 2;,000-,000+oodi$$ P -,000

• net identiJab$e asset 6eans net assets e7/$udin oodi$$ (unidentiJab$easset).

• n a/5uisitionre$ated /osts are /onsidered outriht e7&enses.!. a

-. bConsideration transferred (fair #a$ue) P800,000Fair #a$ue of identi9able assets

Cash P1-0,000IR 1!0,000>oftare ;20,000n&ro/ess R9 200,000"iabi$ities (1;0,000)



Fair #a$ue of net identi9able assets a/5uired 380,000+oodi$$ P120,000

Ahe a&&$i/ation of re/onition 6easure6ents in business /o6bination 6eans that ana/5uirer 6ust, in re/oniBin se&arate$y the a/5uirer's intanib$e assets, re/oniBeintanib$e assets that the a/5uiree has not re/oniBed in its re/ords, su/h as in&ro/ess

resear/h and de#e$o&6ent that /annot be re/oniBe under P> ;8 as interna$$yenerated assets. s noted in &ar ;!, re/onition by an a/5uirer of an a/5uiree's in&ro/ess resear/h and de#e$o&6ent &roe/t on$y de&ends hether the &roe/t 6eets thedeJnition of an intanib$e asset. t /an be seen that intanib$e assets in a business/o6bination i$$ be ab$e, and in fa/t are re5uired, to re/oniBe intanib$e assets thatare not se&arate$y re/oniBab$e hen a/5uired by other 6eans. Ahe /osts on indi#idua$assets a/5uired are 6easured but referen/e to the fair #a$ue of those assets.

Aherefore, nPro/ess Resear/h and 9e#e$o&6ent is /a&ita$iBed as an asset of the/o6bination and re&orted as intanib$e assets ith indeJnite $i#es sube/t toi6&air6ent re#ies.

3. / G(2!,000 shares 7 P;0) * P383,!00H P;;,300. d G(2!,000 shares 7 P;0) * (P20,000 P23,000 * P138,000)H P108,000, ain8. d * GP-00,000 * (P200,000 P220,000 * P110,000)H P1=0,000=. d 10. /

A bargain purchase is a business combination in 3hich the net fair /alue of theidenti9able assets acquired and liabilities assumed e1ceeds the aggregate of theconsideration transferred.

*t should be noted that bargain purchase gain 3ould arise only in e1ceptionalcircumstances. 0herefore$ before determining that gain has arisen$ the acquirer has to:

. ,eassess 3hether it has correctly identi9ed all of the assets acquired andall of the liabilities assumed. 0he acquirer should recogni?e any additionalassets or liabilities that are identi9ed in that re/ie3.

!. Any balance should be recogni?ed immediately in pro9t or loss.

11. d * GP1,300,000 * P1,210,000H P;=0,00012. d1;. / * G(12,000 shares 7 P;0) * P;!;,200 P13,8001!. b * (P83;,000 P;3;,000) P1,223,0001-. a13.

d P21-,000 P1;0,000 P8-,000

1.

b P2;,000 P1=8,000 * (P!0-,000 P23-,000 P1-,000 P20,000)

18.

/ P1,10=,000 Aota$ ssets of AA Cor&. P 8!!,000

"ess: n#est6ent in >> Cor&. (198,000)

oo? #a$ue of assets of AA Cor&. P 3!3,000oo? #a$ue of assets of >> Cor&. !0-,000

Aota$ boo? #a$ue P1,0-1,000Pay6ent in e7/ess of boo? #a$ue (P1=8,000 P1!0,000) 58,000

Aota$ assets re&orted P1,109,000



1=.

/ P01,-00 (P31,-00 P=-,000 P280,000) (P28,000 P;,000

P200,000)

20.

d P2-,-00 Ahe a6ount re&orted by AA Cor&oration

21.

a P!0,-00 Ahe a6ount re&orted by AA Cor&oration

22. b * G(P! 7 12,000 shares) * (P0,000 P210,000 P2!0,000 P20,000 P=0,000 *P!20,000) P10!,000

2;. d PC: P20,000 G(P!2 * P-) 712,000 P!3!,000 Retained earnins: P130,000, &arent on$y2!. b n#entory: PP2;0,000 P210,000 P!!0,000 "and: P280,000 P2!0,000 P-20,000

2-. b * GP!80,000 * (P0,000 P210,000 P2!0,000 P20,000 P=0,000 * P!20,000)H P20,00023. / * (P-0,000 P8,000 P100,000 P1-8,000)

0he acquirer should recogni?e$ separately from good3ill$ the identi9able assetsacquired in a business combination. P+,S ' =!##)>.B'

A patent that ha/e no useful life is not considered an asset.

An intangible is separable if it capable of being separated or di/ided from the entity andsold$ transferred$ licensed$ rented or e1changed$ either indi/idually together 3ith arelated contractP+,S '=!##)>.B'' 0he amount by 3hich the lease terms are fa/orable compared 3ith the terms of currentmarket transactions for the same or similar items is an intangible assets that meets the

contractual-legal criterion for recognition separately from good3ill$ e/en though theacquirer cannot sell or other3ise transfer the lease contract. P+,S ' =!##)>.B'! =a>

Customer and subscriber lists are frequently licensed and thus meet the separabilitycriterion. P+,S '=!##)>.B''.

*t may seem that the terms DresearchE and Dde/elopmentE$ 3hich may be associated 3ithsuch assets as patent and soft3are de/elopment$ are not applicable to all internallyintangibles$ such as brand names. Fo3e/er$ it needs to be remembered that all intangibleassets must meet the identi9ability criterion$ one part of 3hich is separability.

2. / * GP!00 (!0 shares 7 P10)H P80028. d * GP1,080 (P280 P10) P1,;02=. b * GP1,230 (P!!0 P30) P1,30;0. a * GP300 (P;30 P!0)H P1,000;1. e * GP!80 P100H P-80;2. b * GP;;0 (!0 shares 7 P1)H P;0;;. d * GP1,080 !0 shares 7 (P10 P1)H * P1-, sto/? issuan/e /osts P1,!2-;!. a * GP180 P!0 * P20 * P1-S P18-;-. / * G(-0,000 shares 7 P ;-) P-,000H P1,--,000;3. d * GP1,2;0,000 P-80,000H P1,810,000;. / GP1,800,000 P2-0,000H P2,0-0,000;8. e * (P1,800,000 P3-0,000H P2,!-0,000



;=. / * GP1,--,000 * (P2!0,000 P300,000 P-80,000 P2-0,000 P3-0,000 P!00,000 P2!0,000 * P30,000 * P1,120,000)H P!--,000!0. e * GP330,000 P!00,000S P1,030,000!1. d

Retained earnins * tood, Danuary 1, 207! P1,10,000

dd: Eet in/o6e * 207!Re#enues P2,880,000"ess: 47&enses 2,30,000 9ire/t /osts 10,000 110,000

Retained earnins * tood, 9e/e6ber ;1, 207! P1,280,000!2. / * P2,880,000, &arent on$y on the date of /o6bination!;. / * (P2,30,000 P10,000) P2,0,000!!. d * G(P80,000 * P1-,000 * P10,000) P2!0,000H P1,08-,000!-. a

P+,S ' =!##) requires that$ at the acquisition date$ the identi9able assets acquired andliabilities assumed should be designated as necessary to apply other P+,Ss subsequently.0he acquirer makes those classi9cations or designations on the basis of contractualterms$ ... as they e1ist at the acquisition date P+,S ' =!##)>.G

Since$ the patent 3as not recorded separately as identi9able intangible asset on the dateof acquisition$ and then no amount of patent should be subsequently recogni?ed.

!3. / re/ords ne shares at fair #a$ueVa$ue of shares issued (-1,000 × P;)............................................... P1-;,000Par #a$ue of shares issued (-1,000 × P1)......................................... -1,000dditiona$ &aidin /a&ita$ (ne shares) ............................................ P102,000dditiona$ &aidin /a&ita$ (e7istin shares) ...................................... =0,000Conso$idated additiona$ &aidin /a&ita$............................................. P1=2,000

t the date of a/5uisition, the &arent 6a?es no /hane to retained earnins.

!. /Co66on sto/? * /o6binedP 130,000

Co66on * /5uirer Ty7e$.. . 100,000 Co66on sto/? issued...P 30,000 9i#ided by: Par #a$ue of /o66on sto/?.P 2 Eu6ber of Ty7e$ shares to a/5uire +$obe Aattoo..... ;0,000 !8. d Paidin /a&ita$ boo?s of Ty7e$ (P100,000 P3-,000)........P 13-,000 Paidin /a&ita$ in the /o6bined ba$an/e sheet

(P130,000 P2!-,000). !0-,000 Paidin /a&ita$ fro6 the shares issued to a/5uire +$obe Aattoo... P 2!0,000 9i#ided by: Eo. of shares issued (Eo. ;1)..... ;0,000 Fair #a$ue &er share hen sto/? as issued.... P 8

@r,Par #a$ue of /o66on sto/? of Ty7e$ P 2dd: >hare &re6iu6IPC &er share fro6 the additiona$

issuan/e of shares (P2!-,000 * P3-,000)I;0,000............ 3 Fair #a$ue &er share hen sto/? as issued....... P 8 !=. b Eet identiJab$e assets of Ty7e$ before a/5uisition:

(P3-,000 P2,000 P;;,000 P!00,000 * P-0,000 P2-0,000). P20,000



Eet identiJab$e assets in the /o6bined ba$an/e sheet:(P=0,000 P=!,000 P88,000 P3-0,000 * P-,000 P;-0,000)..........!=,000

Fair #a$ue of the net identiJab$e assets he$d by +$obe Aattooat the date of a/5uisition.... P22,000

-0. a

Consideration transferred (;0,000 shares 7 P8) P2!0,000"ess: Fair #a$ue of net identi9able assets a/5uired (Eo. !=).... 22,000+oodi$$.. P 1;,000

-1. /Retained earnins:

/5uirer * Ty7e$ (at boo? #a$ue).... P10-,000/5uiree * +$obe Aattoo (not a/5uired) UU 0

P10-,000*t should be noted that$ there 3as no bargain purchase gain and acquisition-relatedcosts 3hich may a8ect retained earnings on the acquisition date.

-2. b Consideration transferred (fair #a$ue)

P!00,000"ess: Fair #a$ue of net assets a/5uired

(P30,000 P1-,000 P200,000 P22-,000 P-,000 * P100,000);8-,000+oodi$$ P 1-,000

-;. a@n$y the subsidiary's &osta/5uisition in/o6e is in/$uded in /onso$idated tota$s.

-!. dCost P180,000"ess: //u6u$ated de&re/iation (P180,000I;0 years P3,000Iyear 7 ; yrs) 18,000Eet boo? #a$ue P132,000

--. /Eet ssets GP100,000 P-0,000 P132,000 (Eo. -!)HP;12,000"ess: >hares issued at &ar (1-,000 shares 7 P10 &ar)

1-0,000PC P132,000

G&. bP+,S Ho. ' par. &! states that: D*f the initial accounting for business combination can bedetermined only pro/isionally by the end of the period in 3hich the combination ise8ected because either the fair /alues to be assigned to the acquirees identi9ableassets$ liabilities$ or contingent liabilities or the cost of the combination can bedetermined only pro/isionally$ the acquirer shall account for the combination using those

pro/isional /alues. The acquirer shall recognize any adjustments to those provisional values as a result of completing the initial accounting:=a> 3ithin t3el/e months of the acquisition date; and E

-. / Ahe /onsideration transferred shou$d be /o6&ared ith the fair #a$ue of the netassets a/5uired, &er PFR>; &ar. ;2. Ahe ain of P8 6i$$ion resu$ts fro6 abarain &ur/hase and shou$d be re/oniBed in &roJt or $oss, &er PFR>; &ar. ;!.



-8. b Ahe /onsideration transferred shou$d be /o6&ared ith the fair #a$ue of the netassets a/5uired, &er PFR>; &ar ;2. hen &ro#isiona$ fair #a$ues ha#e beenidentiJed at the Jrst re&ortin date after the a/5uisition, adust6ents arisinithin the 6easure6ent &eriod (a 6a7i6u6 of 12 6onths fro6 the a/5uisitiondate) shou$d be re$ated ba/? to the a/5uisition date. >ubse5uent adust6ents

are re/oniBed in &roJt or $oss, un$ess they /an be /$assiJed as errors underP>8 //ountin &o$i/ies, /hanes in a//ountin esti6ates and errors. >eePFR> ; &ars. !- and -0. Ahe Jna$ a6ount of oodi$$ is P130 6i$$ion/onsideration transferred $ess P1;- 6i$$ion fair #a$ues on May ;1, 207- P2-6i$$ion.

-=. / Fair #a$ue of >ubsidiary %o6er

Consideration transferredP 200 6i$$ion dd: Fair #a$ue of /ontinent /onsideration 10 6i$$ion Fair #a$ue of subsidiary P 210 6i$$ion

"ess: Fair #a$ue of identiJab$e assets and $iabi$ities of %o6er............... 1136i$$ion +oodi$$ P =! 6i$$ion

Note 0he consideration transferred should be compared 3ith the fair /alue of thenet assets acquired$ per P+,S' par. '!. 0he contingent consideration should bemeasured at its fair /alue at the acquisition date; any subsequent change in thiscash liability comes under PAS '@ +inancial instruments: recognition andmeasurement and should be recogni?ed in pro9t or loss$ e/en if it arises 3ithin themeasurement period. See P+,S' pars. '@$ "# and G).

30. b31. /32. /3;. b3!. d

Consideration transferred: >hares: (100,000 shares 7 P3.20) P320,000 Continent /onsideration. 18!,000 Aota$. P80!,000

"ess: Fair #a$ue of net identi9able assets a/5uired: Current assets P100,000

45ui&6ent 1-0,000 "and -0,000 ui$dins . ;00,000

"iabi$ities. ( 80,000) -20,000+oodi$$. P28!,000

0he P)"$### is one classical e1ample of contingencies is 3here the future income ofthe acquirer is regarded as uncertain; the agreement contains a clause that requires

the acquirer to pro/ide additional consideration to the acquiree if the income of theacquirer is not equal to or e1ceeds a speci9ed amount o/er some speci9ed period.

3-. d+oodi$$, 1I1I207!............ P 28!,000"ess: dust6ent on /ontinent /onsideration (P18!,000 * P10,000) 1!,000+oodi$$, 8I1I207!............. P 20,000



Changes that are the result of the acquirer obtaining additional information aboutfacts and circumstances that e1isted at the acquisition date$ and that occur 3ithinthe measurement period =3hich may be a ma1imum of one year from the acquisitiondate> are recogni?ed as ad2ustments against the original accounting for theacquisition =and so may impact good3ill> – see Section .'.P+,S ' =!##)> par. G)

*ncidentally$ the entry to record the re/ision of good3ill should be:Istimated liability for contingent consideration. "$###Jood3ill "$###

33. a * refer to Eo. 3! and 3- for further dis/ussion.

3. /9eJ/ien/y: (P13 * P10) 7 100,000 shares issued to a/5uireP 300,0009i#ided by: Fair #a$ue of share...... P 10dded nu6ber of shares to issue..... 30,000

38. (b) * (P-20,000 * P30,000 P!30,000)

Changes resulting from e/ents after =post-combination changes> the acquisition date=e.g. meeting an earnings target$ reaching a speci9ed chare or reaching a milestone onresearch and de/elopment pro2ect> are not measurement period ad2ustments. Suchchanges are therefore accounted for separately from the business combination. 0heacquirer accounts for changes in the fair /alue of contingent consideration that are notmeasurement period ad2ustments as follo3s:

. contingent consideration classi9ed as equity is not remeasured and itssubsequent settlement is accounted for 3ithin equity; and

!. contingent consideration classi9ed as an asset or liability

0he problem on hand falls 3ithin Ho. $ so no ad2ustment 3ould be required to good3illbut accounted for 3ithin the equity section.

*ncidentally$ the entry 3ould be: Paid-in capital in e1cess of par.. &#$### Common stock$ P par.. &#$###

3=. /Par #a$ue of shares outstandin before issuan/e P200,000Par #a$ue of shares outstandin after issuan/e 2-0,000Par #a$ue of additiona$ shares issued P -0,0009i#ided by: Eo. of shares issued UU12,-00Par #a$ue of /o66on sto/? P !

Paidin /a&ita$ before issuan/e (P200,000 P;-0,000) P --0,000 Paidin /a&ita$ after issuan/e (P2-0,000 P--0,00) 800,000 Paidin /a&ita$ of share issued at the ti6e of e7/hane P 2-0,000 9i#ided by: Fair #a$ue &er share of sto/? P 20 >hares issued 12,-00

0. aConsideration transferred: >hares * 12,-00 shares P2-0,000"ess: +oodi$$ -3,000Fair #a$ue of identi9able net assets a/5uired P1=!,000

1. /9e&re/iation e7&ense:



ui$din, at boo? #a$ue (P200,000 * P100,000) I 10 years P 10,000 ui$din, under#a$uation (P1;0,000, fair #a$ue

* P100,000, boo? #a$ue) I 10 years ;,000 45ui&6ent, at boo? #a$ue (P100,000 * P-0,000) I - years 10,000

45ui&6ent, under#a$uation (P-,000, fair #a$ue P-0,000, boo? #a$ue) I - years -,000

Aota$ de&re/iation e7&ense P 28,000

2. dP+,S ' =!##)> par. ) requires an identi9able assets and liabilities assumed aremeasured at their acquisition-date fair /alues.

;. />e$$in &ri/e P 110,000"ess: oo? #a$ue of Co6b (P-0,000 P80,000 P!0,000

P;0,000) 1!0,000"oss on sa$e of business by the a/5uiree (Co6b) P( ;0,000)

!. a *$ue Aon: >to/?ho$ders' e5uity before issuan/e of shares (P00,000 P=80,000)P1,380,000 ssued shares: ;!,000 shares 7 P;-

1,1=0,000 Conso$idated >%4IEet ssets P2,80,000

-. Eo a#ai$ab$e anser P11-,000Cost of n#est6ent (100,000 shares 7 P1.=0) P

1=0,000"ess: Mar?et #a$ue of net assets a/5uired:

Cash P -0,000 Furniture and Jttins 20,000 //ounts re/ei#ab$e -,000

P$ant 2-,000 //ounts &ayab$e (1-,000) Current ta7 $iabi$ity ( 8,000)

"iabities ( 2,000)-,000 +oodi$$ P 11-,000

3. b Cost of n#est6ent GP20,000 (13,000 shares 7 P2.-0)

P-00, in/identa$ /osts) P 30,-00"ess: Mar?et #a$ue of net assets a/5uired:

P$ant P ;0,000n#entory 28,000

//ounts re/ei#ab$e -,000P$ant 20,000//ounts &ayab$e ( 20,000) -8,000

+oodi$$ P 2,-00

hen it $i5uidates, /osts of $i5uidation pad b" the a!#uree shou$d be for the$i5uidation a//ount of the a/5uiree and i$$ e#entua$$y be transferred to shareho$ders'e5uity a//ount. ny /osts of $i5uidation pad or suppled b" the a!#urer shou$d be



/a&ita$iBed as /ost of a/5uisition hi/h is /onsistent ith the /ost 6ode$ under PFR> Eo.; in 6easurin the /ost of the /o6bination.

ny dire/t /osts of a/5uisition shou$d be /a&ita$iBab$e under the /ost 6ode$ reiterated inPFR> Eo. ; Phase . Ahis 6ode$ in PFR> Eo. ; i$$ be a6ended under Phase (&endini6&$e6entation &ossib$y unti$ ear$y 2008), herein a$$ dire/t /osts i$$ be outriht

e7&ense.

Costs of issuin shares i$$ be debited to share &re6iu6 or PC a//ount.

ny /osts of $i5uidation pad or suppled b" the a!#urer shou$d be /a&ita$iBed as/ost of a/5uisition hi/h is /onsistent ith the /ost 6ode$ under PFR> Eo. ; in6easurin the /ost of the /o6bination.

Ahe fair #a$ues of $iabi$ities underta?en are best 6easured by the &resent #a$ues offuture /ash outQos.

ntanib$e assets are re/oniBed hen its fair #a$ue /an be 6easured re$iab$y.

ssets other than intanib$e assets 6ust be re/oniBed if it is &robab$e that the futuree/ono6i/ beneJts i$$ Qo to the a/5uirer and its fair #a$ue /an be 6easured re$iab$y.

. /Consideration transferred:

>hares: 2I; 7 30,000 7 P;.20 128,000Cash

//ounts &ayab$e !-,100Mortae and interest !!,0009ebentures and &re6iu6 -2,-00"i5uidation e7&enses 2 ,!00

1!!,000Cash he$d (12,000) 1;2 ,000

230 ,0007ess: +air /alue of assets and liabilities acquired:

//ounts re/ei#ab$e P;!,00n#entory ;=,000Freeho$d $and 1;0,000ui$dins !0,000P$ant and e5ui&6ent !3 ,000 28=,00

arain Pur/hase +ain 2=,00

8. d=. /

CCUUUUU 99UUUUUUU 44 Aota$UUUUUU

ssets, a&&raised #a$ue P;-,000 P-0,000 P;-,000P1,-00,000 dd: +oodi$$: nnua$ earnins P!1,2-0 P-,000 P;;,-0P1-0,000 "ess: Eor6a$ earnins

3L 7 ssets 22,-00 !-,000 22,-00=0,000



47/ess earnins P18,-0 P;0,000 P11,2-0P30,000

I /a&ita$iBed at 20L 20L U 20LUU20LUU

+oodi$$ P=;,-0 P1-0,000 P-3,2-0P;00,000

Aota$ sto/? to be issued P!38,-0 P=00,000 P!;1,2-0P1,800,000 P!38,-0 P=00,000 P!;1,2-0

1,800,000 1,800,000 !;1,2-0 Per/entae 23L -0L 2!L (/)

80. a UUUU UUUUUDD U UUUUAota$UUUU

#erae annua$ earnins P !3,080 P 3=,120 P 11-,200 9i#ided by: Ca&ita$iBed at U 10L

Aota$ sto/? to be issued P1,1-2,000 "ess: Eet ssets (for PI>) 83!,000 +oodi$$ (for Co66on >to/?) P 288,000

Preferred sto/? (sa6e ith Eet ssets):83!,000IP100 &ar 8,3!0 shares

81. /

Theores1.

a 3. / 11. d 13. / 21. d 23. d ;1 / ;3. /

2.

a . d 12. d 1. / 22. / 2. b ;2. b ;. b

;.

/ 8. d 1;. b 18. / 2;. b 28. a ;;. b ;8. /

!

.

d =. d 1!. d 1=. a 2!. b 2=. d ;!. b ;=. /

-.

d 10, / 1-, b 20. d 2-. b ;0. a ;-. b !0. /

Transferring of Consideration

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Transcript of Transferring of Consideration