Partial goodwill full goodwil

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Chapter 15Problem I

Investment in Shy Inc. [P2,500,000 + (15,000 × P40)] 3,100,000Cash 2,500,000Common Stock 30,000the! Cont!i"#te$ Ca%ita& (P40 ' P2) × 15,000 50,000

the! Cont!i"#te$ Ca%ita& 30,000c*#isition %ense -,000

e/e!!e$ c*#isition Cha!es 0,000c*#isition Costs Paya"&e ,000

Problem IICash P4,000 P44,000 + P30,000cco#nts !eceiva"&e P155,000 P110,000 + P45,000Invento!y P215,000 [P130,000 + P0,000 + (P5,000 P0,000)]6an$ P125,000 [P0,000 + P25,000 + (P45,000 P25,000)]7#i&$ins an$ e*#i%ment P00,000 P500,000 + P400,000

cc#m#&ate$ $e%!eciation P3,000 P223,000 + P1-5,0008oo$9i&& (/#&&'oo$9i&&) P40,000: ;ota& ssets P1,121,000 (P4,000 + P155,000 + P215,000 + P125,000 +

P00,000 P3,000 + P40,000, o! ;ota& ssets o/ Po9e! Co!%. P 1,5006ess Investment in Si&k Co!%. (150,500)

P -41,0007ook vae o/ assets o/ Si&k Co!%. 405,0007ook vae !e%o!te$ "y Po9e! an$ Si&k P1,04-,000Inc!ease in invento!y (P5,000 'P0,000)

15,000

Inc!ease in &an$ (P45,000 ' P25,000) 20,0008oo$9i&& 40,000

;ota& assets !e%o!te$ ("ase$ on /#&&' oo$9i&&) P1,121,000

cco#nts %aya"&e P,500 P-1,500 + P2,000 ;aes %aya"&e P132,000 P5,000 + P3,0007on$s %aya"&e P40,000 P20,000 + P200,000

;ota& &ia"i&ities P01,500 P,500 + P132,000 + P40,000Common stock P150,000, %a!ent on&y


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@A o/ S? o/ SS P 15,000 G#&ti%&ie$ "y =CIB.......................................................... 30B @A o/ =CI (%a!tia&)DDDDDDDDDDDDDDDDD..P 52,500

or, Partial Goodwill

@ai! vae o/ S#"si$ia!y Consi$e!ation t!ans/e!!e$ P150,5006ess 7A o/ S? o/ SS (P50,000 + P0,000) 0B HH,000&&ocate$ ecess P 52,5006ess ve!#n$e! vaation o/ an$ 6 Inc. (ec.) Invento!y (P15,000 0B) P

10,5006an$ (P20,000 0B) 14,000 24,500

8oo$9i&& %a!tia& P 2,000

I/ %a!tia&'oo$9i&& ;ota& ssets P1,10,000 (P4,000 + P155,000 + P215,000 + P125,000 +

P00,000 P3,000 + P2,000,=on'cont!o&&in inte!est (%a!tia&'oo$9i&&) P52,500 =CI

@A o/ S? o/ SS 7ook vae o/ S? o/ SS (P50,000 + P0,000)DDDDD.P 140,000 $E#stments to !eFect /ai! vae (P15,000 + P20,000)D 35,000 @A o/ S? o/ SS P 15,000 G#&ti%&ie$ "y =CIB.......................................................... 30B @A o/ =CI (%a!tia&)DDDDDDDDDDDDDDDDD..P 52,500

Stockho&$e!s> e*#ity P41,500Conso&i$ate$ S? Common stock P150,000 s S? o! *#ity tt!i"#ta"&e to Pa!ent P355,000 =CI (%a!tia&'oo$9i&&) 52,500Conso&i$ate$ S? P404,500

Problem III1.. Investment in Se9e&& -5,000

Cash -5,000

7. Investment in Se9e&& -5,000 Cash -5,000

C. Investment in Se9e&& 31,000 Cash 31,000

2..

@ai! vae o/ S#"si$ia!y

Consi$e!ation t!ans/e!!e$ P-5,0006ess 7A o/ S? o/ S (P450,000 + P10,000 +P5,000)100B

05,000

&&ocate$ ecess P( 30,000)6ess ve!#n$e! vaation o/ an$ 6 Inc. (ec.) Invento!y (P30,000 P20,000) 100B (P10,000)6an$ (P50,000 P0,000) 100B HH20,000 HH10,000

7a!ain P#!chase 8ain /#&& (P 40,000)

7.Partial Goodwill

@ai! vae o/ S#"si$ia!y Consi$e!ation t!ans/e!!e$ P-5,0006ess 7A o/ S? o/ S (P450,000 + P10,000 + P5,000) 0B

-34,500

&&ocate$ ecess P 40,5006ess ve!#n$e! vaation o/ an$ 6 Inc. (ec.) Invento!y (P30,000 P20,000) 0B (P,000)6an$ (P50,000 P0,000) 0B

HH1,000 HH,0008oo$9i&& %a!tia& P 31,500

Full-Goodwill@ai! vae o/ S#"si$ia!y


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Consi$e!ation t!ans/e!!e$ (P-5,0000B) P50,0006ess 7A o/ S? o/ S (P450,000 + P10,000 +P5,000)100B

05,000

&&ocate$ ecess P 45,0006ess ve!#n$e! vaation o/ an$ 6 Inc. (ec.) Invento!y (P30,000 P20,000) 100B (P10,000)

6an$ (P50,000 P0,000) 100B HH20,000 HH10,0008oo$9i&& /#&& P 35,000

C.Partial Goodwill

@ai! vae o/ S#"si$ia!y Consi$e!ation t!ans/e!!e$ P31,0006ess 7A o/ S? o/ S (P-20,000 + P140,000 + P20,000) 0B

-24,000

&&ocate$ ecess (P30-,000)6ess ve!#n$e! vaation o/ an$ 6 Inc. (ec.) Invento!y (P30,000 P20,000) 0B (P ,000)6an$ (P50,000 P0,000) 0B HH1-,000 HH,000

7a!ain P#!chase 8ain %a!tia& (%a!ent on&y) (P314,000)

Full-Goodwill@ai! vae o/ S#"si$ia!y Consi$e!ation t!ans/e!!e$ P 31,000 @A o/ =CI: H15,000

P 4-,0006ess 7A o/ S? o/ S (P-20,000 + P140,000 + P20,000) 100B

0,000

&&ocate$ ecess (P304,000)6ess ve!#n$e! vaation o/ an$ 6 Inc. (ec.) Invento!y (P30,000 P20,000) 100B (P10,000)6an$ (P50,000 P0,000) 100B

HH20,000 H10,000

7a!ain P#!chase 8ain /#&& (%a!ent on&y) (P314,000):7A o/ S? o/ S P0,000 $E#stments to !eFect /ai! vae 10,000 @A o/ S? o/ S P0,000

=CIB 20B @A o/ =CI P15,000

3. . Common Stock Se9e&& 450,000

the! Cont!i"#te$ Ca%ita& Se9e&& 10,000


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the! Cont!i"#te$ Ca%ita& Se9e&& 10,000


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2.

Sche$#&e o/ ete!mination an$ &&ocation o/ cess ate o/ c*#isition an#a!y 1, 204

@ai! vae o/ S#"si$ia!y (100B) Consi$e!ationt!ans/e!!e$DDDDDDDDDDDD.. P 40,0006ess 7ook vae o/ stockho&$e!s> e*#ity o/ S

Common stock (P240,000 100B)DDDDDDD.. P 240,000 Pai$'in ca%ita& in ecess o/ %a! (P24,000 100B)... 24,000


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;ota& ssetsP1,320,00

0P-00,00

0 P1,-02,000"iabilities and #to$%holders&

'uit

cco#nts %aya"&eDDDDD P 120,000P120,00

0 P 240,000

7on$s %aya"&eDDDDDDD 240,000 120,000 3-0,000

P!emi#m on "on$s %aya"&e (3) 42,000 42,000Common stock, P10 %a!DDD -00,000 -00,000

Common stock, P10 %a!DDD 240,000(1)

240,000

Pai$ in ca%ita& in ecess o/ %a!. -0,000 -0,000

Pai$ in ca%ita& in ecess o/ %a!. 24,000 (1) 24,000

*#ity P1,-02,000

Problem

1.

an#a!y 1, 204

(1) Investment in S Com%anyDDDDDDDDDDDDDDDDD 432,000 CashDDDDDDDDDDDDDDDDDDDDDDDDDD..

2,000

Common stock, P10%a!DDDDDDDDDDDDDDDDD..

120,000

Pai$'in ca%ita& in ecess o/%a!DDDDDDDDDDDDDD.

24,000

(2)


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eamine$)DDDDDDDDDDDDDDDDDDDDDDD

12,000

CashDDDDDDDDDDDDDDDDDDDDDDDDDD.

12,000

cquisition related costs.

(3) Pai$'in ca%ita& in ecess o/

%a!DDDDDDDDDDDDDDD..

,400

CashDDDDDDDDDDDDDDDDDDDDDDDDDD.

,400

Costs to issue and register stocks.

2.Sche$#&e o/ ete!mination an$ &&ocation o/ cess

ate o/ c*#isition an#a!y 1, 204@ai! vae o/ S#"si$ia!y (100B) Consi$e!ation t!ans/e!!e$

CashDDDDDDDDDDDDDDDDDDDDD. P 2,000 Common stock 12,000 sha!es P12 %e!

sha!eD.. 144,000 P 432,0006ess 7ook vae o/ stockho&$e!s> e*#ity o/ SCommon stock (P240,000 100B)

DDDDDDD.. P 240,000 Pai$'in ca%ita& in ecess o/ %a! (P-,000 100B).. -,000


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!ssets P Co. S Co. !. C!. Conso&i$ate$

Cash:DDDDDDDDDD..P

111,-00P

54,000 P 1-5,-00

cco#nts !eceiva"&eDD.. 0,000 -0,000 150,000

Invento!yDDDDDDD. 120,000 2,000 (2) 1,000 210,000

6an$DDDDDDDDDDD. 210,000 4,000 (2) 2,000 330,000

7#i&$ins an$ e*#i%ment (net) 40,000 3-0,000 (2)12,000 2,000

8oo$9i&&DDDDDDDD -,000 (2) 3-,000 42,000Investment in S CoDDDD. 432,000 (4) 3-0,000

(5) 2,000 '

;ota& ssetsP1,443,-0

0P-00,00

0 P1,25,-00"iabilities and #to$%holders&

'uit

cco#nts %aya"&eDDDDD P 120,000P120,00

0 P 240,000

7on$s %aya"&eDDDDDDD 240,000 120,000 3-0,000

P!emi#m on "on$s %aya"&e (-) 42,000 42,000

Common stock, P10 %a!::D..D 20,000 20,000

Common stock, P10 %a!DDD 240,000 (1)240,000

$$itiona& %ai$ in ca%ita&::: 5,-00 5,-00

$$itiona& %ai$ in ca%ita&DD 24,000 (1) 24,000

*#ity P1,25,-00


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Problem I

1.Sche$#&e o/ ete!mination an$ &&ocation o/ cess

ate o/ c*#isition an#a!y 1, 204

@ai! vae o/ S#"si$ia!y (100B) Consi$e!ation t!ans/e!!e$ (P40,000 P-,000)DD.. P 402,0006ess 7ook vae o/ stockho&$e!s> e*#ity o/ S

Common stock (P240,000 100B)DDDDDDD.. P 240,000 Pai$'in ca%ita& in ecess o/ %a! (P-,000 100B)... -,000 e*#ity o/ Sky

Common stock (P240,000 100B)DDDDDDD.. P 240,000 Pai$'in ca%ita& in ecess o/ %a! (P-,000 100B)... -,000


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DDDDDDDDDDDDDD

2. 8ain on ac*#isition, P--,000

Problem IIICase 1:P!o%o!tionate 7asis (Pa!tia&'oo$9i&& %%!oach)

• Pa!tia&'oo$9i&&@ai! vae o/ s#"si$ia!y (0B)

Consi$e!ation t!ans/e!!e$ CashDDDDDDDDD.......P12,000,000 (0B) 6ess 7ook vae o/ stockho&$e!s> e*#ity (net assets) S Com%any P,200,000 0B................................. 5,-0,000 (0B) &&ocate$ ecess.DDDDDDDDDDDDDDDDDD........P -,240,000 (0B) 6ess ve!#n$e!vaation o/ assets an$ &ia"i&ities (P,-00,000 P,200,000) 0B....................................... 1,20,000 (0B) Positive ecess 8oo$9i&& (%a!tia&)DDDDDDDDDDD..... P 4,320,000 (0B)

• =on'cont!o&&in inte!est 7ook Aae o/ stockho&$e!s> e*#ity o/ s#"si$ia!yDDDD. P ,200,000 $E#stments to !eFect /ai! vae (ove! #n$e!vaation

o/ assets an$ &ia"i&ities) (P,-00,000 P,200,000)D.. 2,400,000 @ai! vae o/ stockho&$e!s> e*#ity o/ s#"si$ia!yDDDDD P ,-00,000 G#&ti%&ie$ "y =on'cont!o&&in inte!est %e!centae............ 20B

=on'cont!o&&in Inte!est (%a!tia&)DDDDDDDDDDDD.. P1,20,000

@ai! Aae 7asis (@#&&'oo$9i&& %%!oach)• @#&&'oo$9i&&

@ai! vae o/ s#"si$ia!y (100B) Consi$e!ation t!ans/e!!e$ Cash (P12,000,000 0B).. P15,000,000 (100B) 6ess 7ook vae o/ stockho&$e!s> e*#ity (net assets) S Com%any P,200,000 100B.............................. ,200,000 (100B) &&ocate$ ecess.DDDDDDDDDDDDDDDDDD.. P ,00,000 (100B) 6ess ve!Jn$e!vaation o/ assets an$ &ia"i&ities

(P,-00,000 P,200,000) 100B.................................... 2,400,000 (100B) Positive ecess 8oo$9i&& (/#&&)DDDDDDDDDDDD........P 5,400,000 (100B) ;he /#&& oo$9i&& o/ P5,400,000 consists o/ t9o %a!ts

@#&&'oo$9i&&DDDDDDDDDDDDDDDDD....... P 5,400,000 6ess Cont!o&&in inte!est on /#&&'oo$9i&&

o! %a!tia&'oo$9i&&DDDDDDDDDDD.D.. 4,320,000 =CI on /#&&'oo$9i&&DDDDDDDDDDDDDD.......P 1,00,000

• =on'cont!o&&in inte!est =on'cont!o&&in inte!est (%a!tia&)DDDDDDDDDDDD.......P1,20,000

$$ =on'cont!o&&in inte!est on /#&& 'oo$9i&& (P5,400,000 P4,320,000 %a!tia&'oo$9i&&) o! (P5,400,000 20B):DDDDDDDDDDDDD...... 1,00,000

=on'cont!o&&in inte!est (/#&&)DDDDDDDDDDDDD........P3,000,000 a,,lica0le only hen the fair value of the noncontrolling interest of su0sidiary is not given.

Case *:P!o%o!tionate 7asis (Pa!tia&'oo$9i&& %%!oach)

• Pa!tia&'oo$9i&&@ai! vae o/ s#"si$ia!y (-0B)

Consi$e!ation t!ans/e!!e$ CashDDDDDDDDD.....P ,5-0,000 (-0B) 6ess 7ook vae o/ stockho&$e!s> e*#ity (net assets) S Com%any P-,000,000 -0B................................ 3,-00,000 (-0B) &&ocate$ cess.DDDDDDDDDDDDDDDDDD..... P 3,-0,000 (-0B) 6ess ve!#n$e!vaation o/ assets an$ &ia"i&ities (P,400,000 P-,000,000) -0B...................................... 1,440,000 (-0B) Positive ecess 8oo$9i&& (%a!tia&)DDDDDDDDDDD.... P 2,520,000 (-0B)

• =on'cont!o&&in inte!est 7ook vae o/ stockho&$e!s> e*#ity o/ s#"si$ia!yDDDD. P -,000,000 $E#stments to !eFect /ai! vae (ove! #n$e!vaation

o/ assets an$ &ia"i&ities) (P,400,000 P-,000,000)D. 2,400,000 @ai! vae o/ stockho&$e!s> e*#ity o/ s#"si$ia!yDDDDD.P ,400,000 G#&ti%&ie$ "y =on'cont!o&&in Inte!est %e!centae............ 40B

=on'cont!o&&in inte!est (%a!tia&)DDDDDDDDDDDD.P 3,3-0,000


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@ai! vae o/ s#"si$ia!y (100B) Consi$e!ation t!ans/e!!e$ Cash DDDDDDDDD...P ,5-0,000 ( -0B) @ai! vae o/ =CI (iven)DDDDDDDDDDDDD.. 4,00,000 ( 40B)

@ai! vae o/ s#"si$ia!yDDDDDDDDDDDDDDDD...P12,3-0,000 (100B)6ess 7ook vae o/ stockho&$e!s> e*#ity (net assets) S Com%any P-,000,000 100B........................... -,000,000 (100B) &&ocate$ cess.DDDDDDDDDDDDDDDDDDD..P -,3-0,000 (100B) 6ess ve!#n$e!vaation o/ assets an$ &ia"i&ities (P,400,000 P-,000,000) 100B.................................. 2,400,000 (100B) Positive ecess 8oo$9i&& (/#&&)DDDDDDDDDDDD......P 3,-0,000 (100B)

;he /#&& oo$9i&& o/ P3,-0,000 consists o/ t9o %a!ts@#&&'oo$9i&&DDDDDDDDDDDDDDDDD...P 3,-0,000

6ess Cont!o&&in inte!est on /#&&'oo$9i&&o! %a!tia&'oo$9i&&DDDDDDDDDDD. 2,520,000

=CI on /#&&'oo$9i&&DDDDDDDDDDDDDD..P 1,440,000

• =on'cont!o&&in inte!est =on'cont!o&&in inte!est (%a!tia&)DDDDDDDDDDDDP 3,3-0,000

$$ =on'cont!o&&in inte!est on /#&& 'oo$9i&& (P3,-0,000 P2,520,000 %a!tia&'oo$9i&&)DDDD.. 1,440,000 =on'cont!o&&in Inte!est (/#&&)DDDDDDDDDDDDD..P 4,00,000

Case +P!o%o!tionate 7asis (Pa!tia&'oo$9i&& %%!oach)


Consi$e!ation t!ans/e!!e$ CashDDDDDDDDD..P ,000,000 (5B)

6ess 7ook vae o/ stockho&$e!s> e*#ity (net assets) S Com%any P,200,000 5B.......................... 5,400,000 (5B) &&ocate$ cess.DDDDDDDDDDDDDDDDDD...P 3,-00,000 (5B) 6ess ve!#n$e!vaation o/ assets an$ &ia"i&ities (P,-00,000 P,200,000) 5B................................. 1,00,000 (5B) Positive ecess 8oo$9i&& (%a!tia&)DDDDDDDDDDD.P 1,00,000 (5B)

• =on'cont!o&&in inte!est 7ook vae o/ stockho&$e!s> e*#ity o/ s#"si$ia!yDDDD..P ,200,000 $E#stments to !eFect /ai! vae (ove! #n$e!vaation

o/ assets an$ &ia"i&ities) (P,-00,000 P,200,000)D. 2,400,000 @ai! vae o/ stockho&$e!s> e*#ity o/ s#"si$ia!yDDDDDP ,-00,000 G#&ti%&ie$ "y =on'cont!o&&in Inte!est %e!centae............ 25B

=on'cont!o&&in inte!est (%a!tia&)DDDDDDDDDDDD.P 2,400,000


@ai! vae o/ s#"si$ia!yDDDDDDDDDDDDDDDD. P 11,-40,000 (100B)6ess 7ook vae o/ stockho&$e!s> e*#ity (net assets)

S Com%any P,200,000 100B........................... ,200,000 (100B) &&ocate$ cess.DDDDDDDDDDDDDDDDDDD.P 4,440,000 (100B) 6ess ve!#n$e!vaation o/ assets an$ &ia"i&ities (P,-00,000 P,200,000) 100B.................................. 2,400,000 (100B) Positive ecess 8oo$9i&& (/#&&)DDDDDDDDDDDD.....P 2,040,000 (100B)

;he /#&& oo$9i&& o/ P2,040,000 consists o/ t9o %a!ts

@#&&'oo$9i&&DDDDDDDDDDDDDDDDD...P 2,040,000 6ess Cont!o&&in inte!est on /#&&'oo$9i&&o! %a!tia&'oo$9i&&DDDDDDDDDDD.... 1,00,000

=CI on /#&&'oo$9i&&DDDDDDDDDDDDDD. .P 240,000

• =on'cont!o&&in inte!est =on'cont!o&&in inte!est (%a!tia&)DDDDDDDDDDDDP 2,400,000

$$ =on'cont!o&&in inte!est on /#&& 'oo$9i&& (P2,040,000 P1,00,000 %a!tia&'oo$9i&&)D..DD..... 240,000


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=on'cont!o&&in Inte!est (/#&&)DDDDDDDDDDDDD..P 2,-40,000

Case :P!o%o!tionate 7asis (Pa!tia&'oo$9i&& %%!oach)


Consi$e!ation t!ans/e!!e$ CashDDDDDDDDD..P 2,52,000 (-0B) @ai! vae o/ %!evio#s&y he&$ e*#ity inte!est in ac*#i!ee P2,52,000-0B P4,320,000 15B......... -4,000 (15B) @ai! vae o/ S#"si$ia!y ..DDDDDDDDDDDDDDD. P 3,240,000 (5B) 6ess 7ook vae o/ stockho&$e!s> e*#ity (net assets) S Com%any (P4,-0,000 P2,20,000) 5B......... 1,00,000 (5B) &&ocate$ cess.DDDDDDDDDDDDDDDDDD....P 1,440,000 (5B) 6ess ve!#n$e!vaation o/ assets an$ &ia"i&ities [(P-,120,000 P2,20,000)

(P4,-0,000 P2,20,000)] 5B................................ 1,00,000 (5B) Positive ecess 8oo$9i&& (%a!tia&)DDDDDDDDDDD... P 3-0,000 (5B)

• =on'cont!o&&in inte!est

7ook vae o/ stockho&$e!s> e*#ity o/ s#"si$ia!yDDDD..P 2,400,000 $E#stments to !eFect /ai! vae (ove! #n$e!vaationo/ assets an$ &ia"i&ities) (P3,40,000 P2,400,000)D. 1,440,000

@ai! vae o/ stockho&$e!s> e*#ity o/ s#"si$ia!yDDDDDP 3,40,000 G#&ti%&ie$ "y =on'cont!o&&in Inte!est %e!centae............ 25B

=on'cont!o&&in inte!est (%a!tia&)DDDDDDDDDDDDP -0,000


@ai! vae o/ s#"si$ia!y (100B) Consi$e!ation t!ans/e!!e$ CashDDDDDDDDD..P 2,52,000 (-0B)

@ai! vae o/ %!evio#s&y he&$ e*#ity inte!est in ac*#i!ee P2,52,000-0B P4,320,000 15B...... -4,000 (15B) @ai! vae o/ =CI (iven)DDDDDDDDDDDDD. 1,00,000 (25B) @ai! vae o/ s#"si$ia!yDDDDDDDDDDDDDDDD.P 4,320,000 (100B)

6ess 7ook vae o/ stockho&$e!s> e*#ity (net assets) S Com%any P2,400,000 100B........................ 2,400,000 (100B) &&ocate$ cess.DDDDDDDDDDDDDDDDDD..P 1,20,000 (100B) 6ess ve!#n$e!vaation o/ assets an$ &ia"i&ities (P3,40,000 P2,400,000) 100B................................ 1,440,000 (100B) Positive ecess 8oo$9i&& (/#&&)DDDDDDDDDDDD...P 40,000 (100B)

;he /#&& oo$9i&& o/ P40,000 consists o/ t9o %a!ts@#&&'oo$9i&&DDDDDDDDDDDDDDDDD...P 40,000

6ess Cont!o&&in inte!est on /#&&'oo$9i&&o! %a!tia&'oo$9i&&DDDDDDDDDDD.D 3-0,000 =CI on /#&&'oo$9i&&DDDDDDDDDDDDDD..P 120,000

• =on'cont!o&&in inte!est =on'cont!o&&in inte!est (%a!tia&)DDDDDDDDDDDDP -0,000

$$ =on'cont!o&&in inte!est on /#&& 'oo$9i&& (P40,000 P3-0,000 %a!tia&'oo$9i&&)D..DDDD..... 120,000 =on'cont!o&&in Inte!est (/#&&)DDDDDDDDDDDDDDP 1,00,000

Problem I.

• Pa!tia&'oo$9i&& (P!o%o!tionate 7asis)

@ai! vae o/ s#"si$ia!y (5B) Consi$e!ation t!ans/e!!e$CashDDDDDDDDD..

P20,000(5B)

6ess 7ook vae o/ stockho&$e!s> e*#ity(net assets) S Com%any

(P40,000 P22,000) 5B.......................................

1,000(5B)


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&&ocate$ecessDDDDDDDDDDDDDDDDDD...

P 1,000(5B)

6ess ve!#n$e!vaation o/ assets an$ &ia"i&ities [(P-12,000 P22,000) (P40,000 P22,000) 5B

,000(5B)

=eative ecess 7a!ain %#!chase ain (to

cont!o&&ininte!est o! att!i"#ta"&e to %a!ent on&y)DDDDDD.

(P1,000)(5B)

• @#&&'oo$9i&& (@ai! Aae 7asis)

@ai! vae o/ s#"si$ia!y (100B) Consi$e!ation t!ans/e!!e$CashDDDDDDDDD..

P20,000( 5B)

@ai! vae o/ non'cont!o&&in inte!est (iven)DDDD

,400( 25B)

@ai! vae o/ s#"si$ia!yDDDDDDDDDDDDDDDD

P3-,400(100B)

6ess 7ook vae o/ stockho&$e!s> e*#ity(net assets) S Com%any

(P40,000 P22,000) 100B.....................................

252,000(100B)

&&ocate$ecessDDDDDDDDDDDDDDDDDD...

P11-,400(100B)

6ess ve!#n$e!vaation o/ assets an$ &ia"i&ities [(P-12,000 P22,000) (P40,000 P22,000) 100B

132,000(100B)

=eative ecess 7a!ain %#!chase ain (to

cont!o&&ininte!est o! att!i"#ta"&e to %a!ent on&y)DDDDDD.

(P15,-00)(100B)

Problem .

Partial-goodwill !pproa$h

Sche$#&e o/ ete!mination an$ &&ocation o/ cess (Pa!tia&'oo$9i&&)ate o/ c*#isition an#a!y 1, 204

@ai! vae o/ S#"si$ia!y (0B) Consi$e!ationt!ans/e!!e$DDDDDDDDDDDD.. P 3-0,000

6ess 7ook vae o/ stockho&$e!s> e*#ity o/ SkyCommon stock (P240,000 0B)

DDDDDDDD. P 12,000 Pai$'in ca%ita& in ecess o/ %a! (P-,000 0B).... -,00


14/38

;he ove!#n$e! vaation o/ assets an$ &ia"i&ities a!e s#mma!iKe$ as /o&&o9s

Sky Co. 7ook

vae

Sky Co. @ai!

vaeve! Jn$e!

AaationInvento!yDDDDDDD.DDDDD.. 2,000 0,000 1,000

6an$DDDDDDDDDDDDDDD 4,000 120,000 2,0007#i&$ins an$ e*#i%ment(net)......... 3-0,000 34,000 ( 12,000)

7on$s %aya"&eDDDDDDDDDD (120,000) (1-2,000) 42,000

=etDDDDDDDDDDDDDDD.. 3-0,000 3-,000 3-,000

;he "#i&$ins an$ e*#i%ment 9i&& "e /#!the! ana&yKe$ /o! conso&i$ation %#!%oses as /o&&o9s

Sky Co.7ook vae

Sky Co.@ai! vae (ec!ease)

7#i&$ins an$e*#i%ment .................. 20,000 34,000 ( 32,000)6ess cc#m#&ate$$e%!eciationD.. 3-0,000 ' ( 3-0,000)=et "ookvaeDDDDDDDDD... 3-0,000 34,000 ( 12,000)

;he /o&&o9in ent!y on the $ate o/ ac*#isition in the "ooks o/ Pa!ent Com%any

an#a!y 1, 204

(1) Investment in SkyCom%anyDDDDDDDDDDDDDDDDD

3-0,000

CashDDDDDDDDDDDDDDDDDDDDDDDDDD..

3-0,000

c*#isition o/ Sky Com%any.

(2)


15/38

6an$DDDDDDDDDDDDDDDDDDDDDDDDDDD.

2,000

8oo$9i&&DDDDDDDDDDDDDDDDDDDDDDDDD. 43,200 7#i&$ins an$e*#i%mentDDDDDDDDDDDDDDDD..

32,000

P!emi#m on "on$s%aya"&eDDDDDDDDDDDDDDD

42,000

=on'cont!o&&in inte!est (P30,000 20B)DDDDDDDDD.. ,200

Investment in SkyCoDDDDDDDDDDDDDDDDDD..

2,000

/or%sheet 0or Consolidated balan$e #heet, anuar 1, *234 ate o0 !$uisition:627-8wned #ubsidiar (Partial-goodwill)

&iminations

!ssets Pee! Co. Sky Co. !. C!. Conso&i$ate$

Cash:DDDDDDDDDD.

P

45,-00

P

-0,000

P

105,-00



6an$DDDDDDDDDDD. 210,000 4,000 (2) 2,000 330,000

7#i&$ins an$ e*#i%ment -0,000 20,000

(2)32,000 1,30,000

8oo$9i&&DDDDDDDD (2) 43,200 43,200Investment in Sky CoDDDD. 3-0,000 (1) 2,000

(2) 2,000 '

;ota& ssetsP1,5,-0

0P-0,00

0 P 2,14-,00"iabilities and #to$%holders&

'uit

cc#m#&ate$ $e%!eciation

P

40,000

P3-0,00

0

(2)

3-0,000 P 40,000

cco#nts %aya"&eDDDDD 120,000 120,00

0 240,000

7on$s %aya"&eDDDDDDD 240,000 120,000 3-0,000

P!emi#m on "on$s %aya"&e (3) 42,000 42,000

Common stock, P10 %a!DDD -00,000 -00,000


240,000




16/38

Pai$'in ca%ita& in ecess o/ %a! Sky coDDDDDDDDDD

24,000

e*#ity Sky CoDDD..DDDD.. P 3-0,000$E#stments to !eFect /ai! vae (ove! #n$e!vaation

o/ assets an$ &ia"i&ities)DDDDDDDDDDDDDDDD. 3-,000@ai! vae o/ stockho&$e!s> e*#ity o/ s#"si$ia!yDDDDDDD P 3-,000G#&ti%&ie$ "y =on'cont!o&&in Inte!est %e!centaeDDDD... 20=on'cont!o&&in inte!est (%a!tia&)DDDDDDDDDDDDD.. P ,200

;he "a&ance sheet

Pee! Com%any an$ S#"si$ia!y

Conso&i$ate$ 7a&ance Sheet

an#a!y 1, 204

ssetsCash P 105,-00cco#nts !eceiv

a"&es 150,000Invento!ies 210,0006an$ 330,0007#i&$ins an$ e*#i%ment 1,30,000cc#m#&ate$ $e%!eciation ( 40,000)8oo$9i&& 43,200 ;ota& ssets P1,---,00

6ia"i&ities an$ Stockho&$e!s> *#ity6ia"i&ities cco#nts %aya"&e P 240,000

7on$s %aya"&e P 3-0,000 P!emi#m on "on$s %aya"&e 42,000 402,000 ;ota& 6ia"i&ities P -42,000Stockho&$e!s> *#ity Common stock, P10 %a! P -00,000 Pai$'in ca%ita& in ecess o/ %a! -0,000 s Stockho&$e!s> *#ity*#ity tt!i"#ta"&e to the

9ne!s o/ the Pa!ent P 45,-00=on'cont!o&&in inte!est ,200 ;ota& Stockho&$e!s> *#ity (;ota& *#ity) P

1,024,00 ;ota& 6ia"i&ities an$ Stockho&$e!s> *#ity P1,---,00

Full-goodwill !pproa$h

Sche$#&e o/ ete!mination an$ &&ocation o/ cess (@#&&'oo$9i&&)ate o/ c*#isition an#a!y 1, 204

@ai! vae o/ S#"si$ia!y (100B) Consi$e!ation t!ans/e!!e$ (P3-0,000 0B)DDDD.. P 450,0006ess 7ook vae o/ stockho&$e!s> e*#ity o/ Sky

Common stock (P240,000 100B)DDDDDDD. P 240,000 Pai$'in ca%ita& in ecess o/ %a! (P-,000 100B).. -,000


17/38

6ess ve!#n$e! vaation o/ assets an$ &ia"i&ities Inc!ease in invento!y (P1,000 100B)DDDDD P 1,000 Inc!ease in &an$ (P2,000 100B)DDDDDDD. 2,000 ec!ease in "#i&$ins an$ e*#i%ment

(P12,000 100B)

DDDDDDDDDDDDD..... ( 12,000) Inc!ease in "on$s %aya"&e (P42,000 100B)DD. ( 42,000) 3-,000Positive ecess @#&& 'oo$9i&& (ecess o/ cost ove!

/ai! vae)DDDDDDDDDDDDDDDDDD... P 54,000


an#a!y 1, 204

(1) Investment in SkyCom%anyDDDDDDDDDDDDDDDDD

3-0,000

CashDDDDDDDDDDDDDDDDDDDDDDDDDD..

3-0,000

cquisition of Sky Com,any.

(2)


18/38

/or%sheet 0or Consolidated balan$e #heet, anuar 1, *234 ate o0 !$uisition:627-8wned #ubsidiar (Full-goodwill)

&iminations

!ssets Pee! Co. Sky Co. !. C!. Conso&i$ate$

Cash:DDDDDDDDDD.P

45,-00P

-0,000P

105,-00



6an$DDDDDDDDDDD. 210,000 4,000 (2) 2,000 330,000

7#i&$ins an$ e*#i%ment -0,000 20,000

(2)32,000 1,30,000

8oo$9i&&DDDDDDDD (2) 54,000 54,000Investment in Sky CoDDDD. 3-0,000 (1)

2,000

(2)2,000 '

;ota& ssetsP1,5,-0

0P-0,00

0 P 2,15,-00"iabilities and #to$%holders&

'uit

cc#m#&ate$ $e%!eciationP

40,000P3-0,00

0(2)3-0,000 P 40,000

cco#nts %aya"&eDDDDD 120,000 120,00

0 240,000

7on$s %aya"&eDDDDDDD 240,000 120,000 3-0,000

P!emi#m on "on$s %aya"&e (2) 42,000 42,000

Common stock, P10 %a!DDD -00,000 -00,000


240,000




19/38

Conso&i$ate$ 7a&ance Sheet

an#a!y 1, 204

ssetsCash P 105,-00

cco#nts !eceiva"&es 150,000Invento!ies 210,0006an$ 330,0007#i&$ins an$ e*#i%ment 1,30,000cc#m#&ate$ $e%!eciation ( 40,000)8oo$9i&& 54,000 ;ota& ssets P1,-,-00

6ia"i&ities an$ Stockho&$e!s> *#ity6ia"i&ities cco#nts %aya"&e P 240,000 7on$s %aya"&e P 3-0,000 P!emi#m on "on$s %aya"&e 42,000 402,000 ;ota& 6ia"i&ities P -42,000Stockho&$e!s> *#ity Common stock, P10 %a! P -00,000

Pai$'in ca%ita& in ecess o/ %a! -0,000 s Stockho&$e!s> *#ity*#ity tt!i"#ta"&e to the

9ne!s o/ the Pa!entP 45,-00

=on'cont!o&&in inte!est 0,000 ;ota& Stockho&$e!s> *#ity (;ota& *#ity) P

1,035,-00 ;ota& 6ia"i&ities an$ Stockho&$e!s> *#ity P1,-,-00

Problem .I

Partial-goodwill !pproa$h (Proportionate Basis)

Sche$#&e o/ ete!mination an$ &&ocation o/ cess (P!o%o!tionate 7asis))

ate o/ c*#isition an#a!y 1, 204@ai! vae o/ S#"si$ia!y (0B) Consi$e!ation t!ans/e!!e$

Common stock 12,000 sha!es P25 %e!sha!eD... P 300,000

6ess 7ook vae o/ stockho&$e!s> e*#ity o/ SCommon stock (P12,000 0B)

DDDDDDDD. P ,-00 Pai$'in ca%ita& in ecess o/ %a! (P10,000 0B)... -,400


20/38

S Co.7ook vae

S Co.@ai! vae

ve!Jn$e!Aaation

Invento!yDDDDDDD.DDDDD... P -0,000 P --,000 P -,0006an$DDDDDDDDDDDDDDD. 4,000 4,000 3-,0007#i&$ins an$ e*#i%ment

(net)......... 222,000 32,000 150,000Co%y!ihtDDDDDDDDDDDD.. '0' -0,000 -0,000stimate$ &ia"i&ity /o!continencies.. 0 ( -,000) ( -,000)=et#n$e!vaationDDDDDDDD. P 330,000 P 5-,000 P24-,000


an#a!y 1, 204

(1) Investment in S Com%anyD...DDDDDDDDDDDDDD 300,000 Common stock, P1%a!DDDDDDDDDDDDDDDDDD

12,000

Pai$'in ca%ita& in ecess o/ %a! (P300,000 P12,000 %a!)DD..

2,000

cquisition of S Com,any.

;he sche$#&e o/ $ete!mination an$ a&&ocation o/ ecess %!ovi$es com%&ete #i$ance /o! the9o!ksheet e&iminatin ent!ies on an#a!y 1, 204

(1) Common stock S CoDDDDDDDDDDDDDDDDD. 12,000 $$itiona& %ai$'in ca%ita& S CoDDDDDDDDDDDD. 10,000


21/38

&iminations

!ssets P Co. S Co. !. C!. Conso&i$ate$

CashDDDDDDDP

334,00 P 334,00

cco#nts !eceiva"&eDD.. -,400P24,000 110,400

Invento!yDDDDDDD. -,000 -0,000 (2) -,000 1-2,000

6an$DDDDDDDDDD 120,000 4,000 (2) 3-,000 204,000

7#i&$ins an$ e*#i%ment (net). 44,00

0 222,00

0 (2) 150,000 1,11-,000

Co%y!ihtDDDDDDDD... (2) -0,000 -0,000Investment in S CoDD.. 300,000

HHHHHHHHHH HHHHHHHHH (1)153,-00(2)14-,400 '

;ota& ssetsP1,-1,20

0 354,000 P1,,200"iabilities and #to$%holders&

'uit

cco#nts %aya"&eDDDP

-,000 42,000 P 13,000stimate$ &ia"i&ity /o!

continenciesD

(2)

-,000 -,000

7on$s %aya"&eDDD 240,000 120,000 3-0,000

Common stock, P1 %a!:D..D 44,1-0 44,1-0

Common stock, P1 %a!DDD 12,000 (1) 12,000Pai$'in ca%ita& in ecess o/

%a!:: 23,40 23,40

Pai$'in ca%ita& in ecess o/ %a! 10,000

(1) (1)10,000


22/38

ssetsCash P 334,00cco#nts !eceiva"&es 110,400Invento!ies 1-2,0006an$ 204,0007#i&$ins an$ e*#i%ment (net) 1,11-,000Co%y!iht -0,000 ;ota& ssets P1,,200

6ia"i&ities an$ Stockho&$e!s> *#ity6ia"i&ities cco#nts %aya"&e P 13,000 stimate$ &ia"i&ity /o! continencies -,000 7on$s %aya"&e 3-0,000 ;ota& 6ia"i&ities P 504,000Stockho&$e!s> *#ity Common stock, P1 %a! P 44,1-0 Pai$'in ca%ita& in ecess o/ %a! 23,40 s Stockho&$e!s> *#ity*#ity tt!i"#ta"&e to the

9ne!s o/ the Pa!ent P1,35,-00=on'cont!o&&in inte!est ,-00 ;ota& Stockho&$e!s> *#ity (;ota& *#ity) P1,43,200

;ota& 6ia"i&ities an$ Stockho&$e!s> *#ity P1,,200

Full-goodwill !pproa$h (Fair alue Basis)Sche$#&e o/ ete!mination an$ &&ocation o/ cess (@#&&'oo$9i&& o! @ai! Aae 7asis)ate o/ c*#isition an#a!y 1, 204

@ai! vae o/ S#"si$ia!y (100B) Consi$e!ation t!ans/e!!e$

Common stock 12,000 P25 (0B)DDDDDD P 300,000 @ai! vae o/ =CI (iven) (20B)DDDDDDDDD. 0,000 @ai! vae o/ s#"si$ia!y (100B)DDDDDDDDD. P 30,0006ess 7ook vae o/ stockho&$e!s> e*#ity o/ S

Common stock (P12,000 100B)DDDDDDDD. P 12,000 Pai$'in ca%ita& in ecess o/ %a! (P10,000 100B). 10,000


23/38

Pai$'in ca%ita& in ecess o/ %a! (P300,000 P12,000 %a!)DD..

2,000

c*#isition o/ S Com%any.

;he sche$#&e o/ $ete!mination an$ a&&ocation o/ ecess %!ovi$es com%&ete #i$ance /o! the9o!ksheet e&iminatin ent!ies on an#a!y 1, 204

(1) Common stock S CoDDDDDDDDDDDDDDDDD. 12,000 $$itiona& %ai$'in ca%ita& S CoDDDDDDDDDDDD. 10,000


24/38

Common stock, P1 %a!DDD 12,000 (2) 12,000

Pai$'in ca%ita& in ecess o/ %a!:: 23,40 23,40

Pai$'in ca%ita& in ecess o/ %a! 10,000

(2) (1)10,000

*#ity*#ity tt!i"#ta"&e to the

9ne!s o/ the Pa!ent P1,33,200=on'cont!o&&in inte!est 0,000 ;ota& Stockho&$e!s> *#ity (;ota& *#ity) P1,43,200 ;ota& 6ia"i&ities an$ Stockho&$e!s> *#ity P1,,200

Problem .II1.

Invento!y P 140,000

2.

6an$ P -0,000

3.

7#i&$ins an$ *#i%ment P 550,000

4.

8oo$9i&&

@ai! vae o/ consi$e!ation iven P 5-,0006essL 7ook vae o/ S? 450,000&&ocate$ ecess P12-,000Inc!ease $ec!ease in /ai! vae (@ai! vaeinc!ement) /o! Invento!y P 20,000

6an$ (10,000) 7#i&$ins an$ e*#i%ment 0,000 0,0008oo$9i&& P 4-,000


25/38

5.

Investment in Co!%o!ation =othin 9o#&$ "e !e%o!te$L the "a&ance in the

investment acco#nt is e&iminate$.

Problem .III1. Invento!ies (P110,000 + P10,000 P10,000) P20,000

2. 7#i&$ins an$ e*#i%ment, net (P350,000 + P350,000 + P25,000 P25,0003. Investment in stock 9i&& "e /#&&y e&iminate$ an$ 9i&& not a%%ea! in the conso&i$ate$"a&ance sheet

@ai! vae o/ S#"si$ia!y Consi$e!ation t!ans/e!!e$ P20,0006ess 7A o/ S? o/ (P100,000 + P200,000 P40,000)

2-0,000

&&ocate$ ecess P 20,0006ess ve!#n$e! vaation o/ an$ 6 Inc(ec!ease)

Invento!y (P10,000)7#i&$ins an$ e*#i%ment (net) 25,000 15,000

P 5,000$$ istin oo$9i&& (to "e e&iminate$ 30,0008oo$9i&& to "e !e%o!te$ P 35,000

o!, (%%!oach #se$ in "#siness com"ination stat#to!y me!e!conso&i$ation)@ai! vae o/ consi$e!ation iven P20,000@ai! vae o/ eci"e&Ms net assets Cash an$ !eceiva"&es P 40,000Invento!y 10,0007#i&$ins an$ e*#i%ment (net) 35,000

cco#nts %aya"&e (0,000) =otes %aya"&e (250,000)@ai! vae o/ net i$entiNa"&e assets

(245,000)8oo$9i&& to "e !e%o!te$ P 35,000

4ote5 6oo

dill on 0ooks of 77 is not an identi8a0le asset and therefore is not included in thecom,utation of 7eci0el9s net identi8a0le assets at the date of acquisition.

5. Common stock, P400,000 (%a!ent on&y, S? o/ s#"si$ia!y is e&iminate$)-.


26/38

@ai! vae inc!ement /o! Invento!y 20,000 6an$ (10,000) 7#i&$ins an$ e*#i%ment (net) 0,000@ai! vae o/ i$entiNa"&e net assets (530,000)8oo$9i&& ' /#&& P 5,500

Pa!tia& 8oo$9i&&, P4-,000@ai! vae o/ S#"si$ia!y Consi$e!ation t!ans/e!!e$ P40,0006ess 7A o/ S? o/ S&im (P250,000 + P200,000) 0B 3-0,000&&ocate$ ecess P110,0006ess ve!#n$e! vaation o/ an$ 6 Inc. (ec.) Invento!y (P20,000 0B) P 1-,0006an$ (P10,000 0B) ( ,000)

7#i&$ins an$ e*#i%ment (net) (P0,000 0B) 5-,000 -4,0008oo$9i&& %a!tia& P 4-,000

5

.

Investment in S&im Co!%o!ation =one 9o#&$ "e !e%o!te$L

the "a&ance in the investment acco#nt is e&iminate$.

-.

=oncont!o&&in Inte!est (P5,500 .20) P11,500

o!, 7A S? o/ SS P450,000

$E#stments to !eFect /ai! vae (P20,000 P10,000 +P 0,000) 0,000@A o/ S? o/ SS P530,000

G#&ti%&ie$ "y =CI B 20B =CI %a!tia& oo$9i&& P10-,000

$$ =CI on /#&&'oo$9i&& (P5,500 P4-,000) 11,500

=CI /#&& oo$9i&& P11,500

Problem .(ve!vie9 o/ the ste%s in a%%&yin the ac*#isition metho$ 9hen sha!es have "een iss#e$ toc!eate a com"ination =o. inc$es a "a!ain %#!chase.)

1. ;he /ai! vae o/ the consi$e!ation inc$es@ai! vae o/ stock iss#e$ P1,500,000Continent %e!/o!mance o"&iation 30,000@ai! vae o/ consi$e!ation t!ans/e!!e$ P1,530,000

2. Jn$e! the ac*#isition metho$, stock iss#e costs !e$#ce a$$itiona& %ai$'in ca%ita&.3. ;he ac*#isition metho$ !eco!$s $i!ect costs s#ch as /ees %ai$ to investment "anks

/o! a!!anin the com"ination as e%enses.4. ;he %a! vae o/ the 20,000 sha!es iss#e$ is !eco!$e$ as an inc!ease o/ P20,000 in

the Common Stock acco#nt. ;he P4 /ai! vae in ecess o/ %a! vae (P5 P1) isan inc!ease to a$$itiona& %ai$'in ca%ita& o/ P1,40,000 (P4 20,000 sha!es).

5. @ai! vae o/ consi$e!ation t!ans/e!!e$ (a"ove) P1,530,000


27/38

6ia"i&ities (400,000) 1,10,000 8ain on "a!ain %#!chase P 150,000

Problem .IIn ac*#isitions, the /ai! vaes o/ the s#"si$ia!yMs assets an$ &ia"i&ities a!e conso&i$ate$(the!e a!e a &imite$ n#m"e! o/ ece%tions). 8oo$9i&& is !e%o!te$ as P0,000, the amo#nt that

the P-0,000 consi$e!ation t!ans/e!!e$ ecee$s the P-0,000 /ai! vae o/ SS>s net assetsac*#i!e$.

1. Invento!y P-0,000 (PMs "ook vae %s S#nMs /ai! vae)2. 6an$ P10,000 (PMs "ook vae %s S#nMs /ai! vae)3. 7#i&$ins an$ e*#i%ment P30,000 (PMs "ook vae %s SMs /ai! vae)4. @!anchise a!eements P440,000 PMs "ook vae %s SMs /ai! vae)5. 8oo$9i&& P0,000 (ca&c#&ate$ a"ove)-.


28/38

isco#nt on "on$s %aya"&e P20,000 /ai! P300,000

"ook vae)20,000

e/e!!e$ ta &ia"i&ity (P40,000 /ai! P50,000 "ookvae)

10,000

7#i&$ins an$ e*#i%ment (net) 10,000

8oo$9i&& P 50,000

3. $E#stments on C!ai "ooks6an$...................................................................................... 50,0007#i&$in................................................................................. 100,000isco#nt on 7on$s Paya"&e................................................... 20,0008oo$9i&&................................................................................ 50,000e/e!!e$ ;a 6ia"i&ity............................................................. 10,000


29/38

• Inci$enta&&y, the %a!tia& oo$9i&& amo#nte$ to P1,200 (P2,000 -0B)L @A o/ =CI on/#&&'oo$9i&& amo#nte$ to P00 (P2,000 P1,200 o! P2,000 40B). ;his a%%!oach to$ete!mine %a!tia& oo$9i&& is acce%ta"&e as &on as the!e is @A o/ =CI in the ac*#i!e!.

Problem ..III (!ssume the use o0 Full-Goodwill 9ethod)=ote ;his sotion ass#mes a $ie!ence "et9een the "asis o/ ac*#i!e$ assets /o!

acco#ntin an$ ta %#!%oses /o! this stock ac*#isition.

1. Investment in See&y Com%any 50,000Common Stock::: 5,000$$itiona& Pai$'in'Ca%ita& 45,000

:::=ote e%en$in on the 9o!$in o/ this ee!cise, the c!e$it may "e cash instea$ o/common stock an$ a$$itiona& %ai$'in'ca%ita&. I/ cash is %ai$, the c!e$it to cash is P50,000.

2. Common Stock ' See&y 0,000the! Cont!i"#te$ Ca%ita& See&y 132,000


30/38

&so, a $i!ect o! in$i!ect a"i&ity to make $ecisions that siniNcant&y aect the !es#&tso/ the activities o/ a va!ia"&e inte!est entity is a st!on in$ication that an ente!%!isehas one o! "oth o/ the cha!acte!istics that 9o#&$ !e*#i!e conso&i$ation o/ theva!ia"&e inte!est entity.

c. assets an$ &ia"i&ities a!e !econiKe$ at thei! in$ivi$#a& /ai!vaes.

Cash P20,000Ga!ketin so/t9a!e 1-0,000Com%#te! e*#i%ment 40,0006on'te!m $e"t (120,000)=oncont!o&&in inte!est (-0,000)Pantech e*#ity inte!est (20,000)8ain on "a!ain %#!chase (20,000)

'0'

2. Im%&ie$ vaation an$ ecess vaation /o! So/t%s.=oncont!o&&in inte!est /ai! vae -0,000Consi$e!ation t!ans/e!!e$ "y Pantech 20,000

;ota& "#siness /ai! vae 0,000@ai! vae o/ AI net i$entiNa"&e assets -0,0008oo$9i&& P20,000

Yhen the "#siness /ai! vae o/ a AI (that is a "#siness) is !eate! than assesse$asset vaes, a&& i$entiNa"&e assets an$ &ia"i&ities a!e !e%o!te$ at /ai! vaes (#n&ess a%!evio#s&y he&$ inte!est) an$ the $ie!ence is t!eate$ as a oo$9i&&.

Cash P20,000

Ga!ketin so/t9a!e 120,000Com%#te! e*#i%ment 40,0008oo$9i&& (ecess "#siness /ai! vae) 20,0006on'te!m $e"t (120,000)=oncont!o&&in inte!est (-0,000)Pantech e*#ity inte!est (20,000)

'0'9ultiple Choi$e Problem1. c


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2. c [P300,000 (P35,000 + P-0,000 + 125,000 + P250,000 P-5,000 P150,000)]3. $ Consi$e!ation t!ans/e!!e$ P300,000 6ess 7ook vae o/ S? o/ S (P100,000 + P115,000) 215,000 &&ocate$ ecess (ecess o/ /ai! vae o! cost ove! "ook vae) ' sometimes te!me$ as Uie!entia&V P 5,000

4. a Investment in s#"si$ia!y in the conso&i$ate$ statements is e&iminate$ in its enti!ety.5. $ Consi$e!ation t!ans/e!!e$ P150,000 6ess 7ook vae o/ S? o/ S (P40,000 + P52,000) 2,000 &&ocate$ ecess (ecess o/ /ai! vae o! cost ove! "ook vae) ' sometimes te!me$ as Uie!entia&V P 5,000

-. " [P150,000 (P13,000 P40,000 P5,000)]. $ [P132,000 + (P3,000 + ZP-0,000 P3,000] o! P132,000 + P-0,000. "

;ota& ssets o/ P. P1,2,0006ess Investment in Si&k Co!%. (440,000)

P 3,000

7ook vae o/ assets o/ S Co!%. 542,0007ook vae !e%o!te$ "y P an$ S P1,30,00

0Inc!ease in invento!y (P-0,000 P3,000) 22,000Inc!ease in &an$ (P-0,000 P32,000) 2,000Inc!ease in %&ant assets [P350,000 (P300,000 P-0,000)]

110,000

8oo$9i&& (/#&&): 2-,-- ;ota& assets !e%o!te$ P1,5--,--:(P440,0005B) (P02,000 P142,000) P2-,--

I/ %a!tia&'oo$9i&& ;ota& ssets o/ P. P1,2,000

6ess Investment in S Co!%. (440,000)P 3,000

7ook vae o/ assets o/ S Co!%. 542,0007ook vae !e%o!te$ "y P an$ S P1,30,00

0Inc!ease in invento!y (P-0,000 P3,000) 22,000Inc!ease in &an$ (P-0,000 P32,000) 2,000Inc!ease in %&ant assets [P350,000 (P300,000 P-0,000)]

110,000

8oo$9i&& (%a!tia&): 20,000 ;ota& assets !e%o!te$ P1,540,000:[P440,000 (P02,000 P142,000) 5B]

. $ P215,000 P130,000 + P0,000 + (P5,000 ' P0,000)

10.

a

Partial Goodwill

@ai! vae o/ S#"si$ia!y Consi$e!ation t!ans/e!!e$ P150,5006ess 7A o/ S? o/ SS (P50,000 + P0,000) 0B HH,000&&ocate$ ecess P 52,5006ess ve!#n$e! vaation o/ an$ 6 Inc. (ec.) Invento!y (P15,000 0B) P

10,5006an$ (P20,000 0B) 14,000 24,500

8oo$9i&& %a!tia& P 2,000

11. c Full-goodwill:

@ai! vae o/ S#"si$ia!y Consi$e!ation t!ans/e!!e$ P150,500

$$ @A o/ =CI ::-4,500 P215,0006ess 7A o/ S? o/ SS (P50,000 + P0,000) 100B 140,000&&ocate$ ecess P 5,0006ess ve!#n$e! vaation o/ an$ 6 Inc. (ec.)


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Invento!y (P0,000 P5,000) 100B P 15,0006an$ (P25,000 P45,000) 100B 20,000 35,000

8oo$9i&& /#&& P 40,000::iven amo#nt, "#t it sho#&$ not "e &o9e! than the /ai! vae o/ S? s#"si$ia!y amo#ntin

toP52,500 com%#te$ as /o&&o9s


12. " ;ota& ssets o/ Po9e! Co!%. P 1,5006ess Investment in Si&k Co!%. (150,500)

P -41,0007ook vae o/ assets o/ Si&k Co!%. 405,0007ook vae !e%o!te$ "y Po9e! an$ Si&k P1,04-,000

Inc!ease in invento!y (P5,000 ' P0,000) 15,000Inc!ease in &an$ (P45,000 ' P25,000) 20,0008oo$9i&& (/#&&) 40,000

;ota& assets !e%o!te$ P1,121,000

I/ %a!tia&'oo$9i&& ;ota& ssets o/ Po9e! Co!%. P 1,5006ess Investment in Si&k Co!%. (150,500)

P -41,0007ook vae o/ assets o/ Si&k Co!%. 405,0007ook vae !e%o!te$ "y Po9e! an$ Si&k P1,04-,000Inc!ease in invento!y (P5,000 ' P0,000) 15,000

Inc!ease in &an$ (P45,000 ' P25,000) 20,0008oo$9i&& (%a!tia&) 2,000 ;ota& assets !e%o!te$ P1,10,000

13.

$ P01,500 (P-1,500 + P5,000 + P20,000) + (P2,000 + P3,000

+ P200,000)

14. a=on'cont!o&&in inte!est (%a!tia&'oo$9i&&) P52,500 =CI

@A o/ S? o/ SS 7ook vae o/ S? o/ SS (P50,000 + P0,000)DDDDD.P 140,000 $E#stments to !eFect /ai! vae (P15,000 + P20,000)D 35,000

@A o/ S? o/ SS P 15,000 G#&ti%&ie$ "y =CIB.......................................................... 30B @A o/ =CI (%a!tia&)DDDDDDDDDDDDDDDDD..P 52,500

15.

$

=on'cont!o&&in inte!est (%a!tia&'oo$9i&&) P-4,500 =CI


$$ =CI on /#&&'oo$9i&& (P40,000 P12,000)DDDD... 12,000 @A o/ =CI (/#&&)DDDDDDDDDDDDDDDDDDD..P -4,500

1-.

$ P205,000 ;he amo#nt !e%o!te$ "y Po9e! Co!%o!ation

1.

c P41,500 (P150,000 + P205,000) + P-4,500


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I/ %a!tia&'oo$9i&&Stockho&$e!s> e*#ity P41,500

Conso&i$ate$ S? Common stock P150,000 s S? o! *#ity tt!i"#ta"&e to Pa!ent P355,000

=CI (%a!tia&'oo$9i&&) 52,500Conso&i$ate$ S? P404,500

1. "Consi$e!ation t!ans/e!!e$ ....................................................................... P-0,0006ess St!an$Ms "ook vae (P50,000 0B)............................................. (40,000 )@ai! vae in ecess o/ "ook vae .......................................................... P20,000cess assine$ to invento!y (-0B) ..........................................P12,000

cess assine$ to oo$9i&& (40B) ...........................P ,000

1. cConsi$e!ation t!ans/e!!e$ (P-0,000 \ 0B)............................................ P5,0006ess St!an$Ms "ook vae ....................................................................... (50,000)@ai! vae in ecess o/ "ook vae .......................................................... P25,000cess assine$ to invento!y (-0B) ..........................................P15,000

cess assine$ to oo$9i&& (40B) ...........................P10,000

20. aPa!k c#!!ent assets................................................................................. P 0,000St!an$ c#!!ent assets.............................................................................. 20,000cess invento!y /ai! vae..................................................................... 15,000Conso&i$ate$ c#!!ent assets.................................................................... P105,000

21. c Pa!k nonc#!!ent assets........................................................................... P 0,000

St!an$ nonc#!!ent assets....................................................................... 40,000cess /ai! vae to oo$9i&& (%a!tia&).................................................... HHH,000Conso&i$ate$ nonc#!!ent assets............................................................. P140,000

22. $ Pa!k nonc#!!ent assets............................................................................ P 0,000

St!an$ nonc#!!ent assets........................................................................ 40,000cess /ai! vae to oo$9i&& (/#&&)........................................................... HH10,000Conso&i$ate$ nonc#!!ent assets.............................................................. P140,000

23. " $$ the t9o "ook vaes an$ inc$e 10B (the P-,000 c#!!ent %o!tion) o/ the &oantaken o#t "y Pa!k to ac*#i!e St!an$.

24. " $$ the t9o "ook vaes an$ inc$e 0B (the P54,000 nonc#!!ent %o!tion) o/ the&oan taken o#t "y Po&k to ac*#i!e St!an$.

25. " Pa!k stockho&$e!sM e*#ity....................................................................... P0,000

=CI (%a!tia&) 7A o/ S? S DDDDDDDDDDDDDDDDDDDDDDD..P50,000 $E#stments to !eFect /ai! vae (invento!y)DDDDDDDDD. 15,000

@A o/ S? SDDDDDDDDDDDDDDDDDDDDDDDDP-5,000 G#&ti%&ie$ "y =CIB........................................................................ 20B

13,000 ;ota& stockho&$e!sM e*#ity...................................................................... P3,0002-. c

Pa!k stockho&$e!sM e*#ity......................................................... DDDD. P0,000=CI (/#&&)

7A o/ S? S DDDDDDDDDDDDDDDDDDDDDDD..P50,000 $E#stments to !eFect /ai! vae (invento!y)DDDDDDDDD. 15,000

@A o/ S? SDDDDDDDDDDDDDDDDDDDDDDDDP-5,000 G#&ti%&ie$ "y =CIB......................................................................... 20B


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=CI (%a!tia&)DDDDDDDDDDDDDDDDDDDDDDDDP13,000 $$ =CI on /#&&'oo$9i&& (P10,,000 P,000)DDDDDDDDD 2,000 =on'cont!o&&in inte!est at /ai! vae (20B P5,000)DDDD15,000

;ota& stockho&$e!sM e*#ityP5,000

2. "2. a P150,000 + P500,0002. a at /ai! vae30. $

(1) =CI meas#!e$ at its sha!e o/ net assets (Pa!tia& 8oo$9i&&) @ai! vae o/ S#"si$ia!y

Consi$e!ation t!ans/e!!e$DDDDDDDDDDDDDDDDDDDDDP 100 mi&&ion 6ess @ai! vae o/ i$entiNa"&e assets an$ &ia"i&ities o/ 6oco

(0B P5 mi&&ion)DDDDDDDDDDDDDDDDDDDD.. -mi&&ion 8oo$9i&& (%a!tia&)..DDDDDDDDDDDDDDDDDDDDDDDDD..P 32 mi&&ion

(2) =CI is meas#!e$ at its /ai! vae (@#&& 8oo$9i&&) @ai! vae o/ S#"si$ia!y

Consi$e!ation t!ans/e!!e$DDDDDDDDDDDDDDDDDDDDDP 100 mi&&ion @ai! vae o/ =CI [(P100 mi&&ion P24 mi&&ion P- mi&&ion 0B

P5 mi&&ion] 20B....................................................................................1 mi&&ion

@ai! vae o/ S#"si$ia!yDDDDDDDDDDDDDDDDDDDDDDD...P 11 mi&&ion 6ess @ai! vae o/ i$entiNa"&e assets an$ &ia"i&ities o/ akDDDDDDDD. 5mi&&ion 8oo$9i&& (/#&&)DDDDDDDDDDDDDDDDDDDDDDDDDDDD...P 34 mi&&ion

S/ ,ar. /2$ goodill is measured at the consideration transferred ,lus the noncontrolling interest (hoever measured) less net assetsacquired. ?he noncontrolling interest may 0e measured at its share of netassets or its fair value$ ,er !=>S/ ,ar. 1@.


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!, a&te!native&y @ai! vae o/ S#"si$ia!y

Consi$e!ation t!ans/e!!e$DDDDDDDDDDDDDDDDDDDDDDDDP1,-0,000 6ess 7ook vae o/ S? o/ ak (P100,000 + P300,000 + P1,400,000) 0B..........1,2-0.000 &&ocate$ ecessDDDDDDDDDDDDDDDDDDDDDDDDDDDD..P 00,000

6ess ve!#n$e! vaation o/ assets an$ &ia"i&ities(P1,00,000 P00,000) 0B......................................................................0,000

8oo$9i&& (%a!tia&)DDDDDDDDDDDDDDDDDDDDDDDDDDDD..P1,40,000

Note: Since the com,any elected to measure 4CA at its share of the identi8a0le netassets instead of fair value$ therefore the ,artial goodill a,,roach should 0e used.

33. $ ' P52,000 P300,000 + P20,000 + P22,000

34. a P2-,-- Partial Goodwill

@ai! vae o/ S#"si$ia!y Consi$e!ation t!ans/e!!e$ P440,0006ess 7A o/ S? o/ S (P400,000 5B) HH300,000&&ocate$ ecess P140,0006ess ve!#n$e! vaation o/ an$ 6 Inc. (ec.) C#!!ent assets (P22,000 5B) P

1-,5006an$, "#i&$ins an$ e*#i%ment (P13,000 5B) 103,500 120,000

8oo$9i&& %a!tia& P 20,000

Full-goodwill:

@ai! vae o/ S#"si$ia!y Consi$e!ation t!ans/e!!e$ (P440,000 5B) P5-,--6ess 7A o/ S? o/ S (P400,000 100B)

HH400,000

&&ocate$ ecess P1-,--6ess ve!#n$e! vaation o/ an$ 6 Inc. (ec.) C#!!ent assets (P22,000 100B) P

22,0006an$, "#i&$ins an$ e*#i%ment (P13,000 100B) 13,000 1-0,000

8oo$9i&& /#&& P 2-,--35. " Conso&i$ate$ ;ota& ssets

C#!!ent assets (=o. 32) P 52,000 6an$, "#i&$ins an$ e*#i%ment

[P53,000 + P22,000 + P13,000 + P2-,--, /#&&'oo$9i&&] 4,-- P 1,5--,--3- c

@A o/ S? o/ SS 7ook vae o/ S? o/ SDDDDDDDDDDDDDDD.P 400,000 $E#stments to !eFect /ai! vae DDDDDDDDDD. 1-0,000 @A o/ S? o/ SDDDDDDDDDDDDDDDDDDD..P 5-0,000 G#&ti%&ie$ "y =CIB.............................................................. 25B @A o/ =CI (%a!tia&)DDDDDDDDDDDDDDDDD..P 140,000

$$ =CI on /#&&'oo $9i&& (P2-,-- P20,000)DDDD.... -,-- @A o/ =CI (/#&&'oo$9i&&)DDDDDDDDDDDDDD...P 14-,--

3. $ Conso&i$ate$ ;ota& 6ia"i&ities

6ia"i&ities P Co. (P300,000 + P53,000 + P440,000 P34,333)..P 2,--

S CoDDDDDDDDDDDDDDDDDDDDD.. 142,000

P1,01,--3. $ Conso&i$ate$ Stockho&$e!s> *#ity

Pa!ent>s stockho&$e!s> e*#ityDDDDDDDDDDDDDDDP 34,333 $$ =CI (/#&&'oo$9i&&) (=o. 3-)DDDDDDDDDDDDD.. 14-,--

P 45,000

3. "@A, stocks iss#e$DDDDDDDDDDDDDDDDDDD P


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4,200,0006ess Pa! vae o/ stocks iss#e$ (500,000 sha!es P5)DD..

HH2,500,000

PIC P1,00,000

$$ PIC o/ P ,500,000

6ess Stock iss#ance cost HHH100,000P,100,000

40. c41. a42. =o ans9e! avai&a"&e43. a ( P10 100,000 P1,000,000 P1,400,000) P400,00044. a45. c4-. a

[P15 100,000 P1,500,000 (P1,00,000 P100,000 -00,000 )+ P100,000inc!ease + P100,000 in inc!ease in PP] P100,000

4. "

P1,500,000 (1,00,000 50,000 $ec!ease in invento!ies) + (P100,000 inc!ease inPP P300,000 P500,000) P550,0004. a4. $ (P1,000,000 + P250,000) P1,250,000 P on&y.50. $ [P,000 + (P45,000 P2-,000)] o! (P,000 + P45,000) P144,000

51. " [(P330,0005B) (P5-5,000 P105,000)] (P20,000) /#&&'oo$9i&& a%%!oach52. a P on&y53. $

;ota& ssets o/ P P -0,0006ess Investment in S (330,000)

P -30,0007ook vae o/ assets o/ S 405,0007ook vae !e%o!te$ "y P an$ S P1,035,000

Inc!ease in invento!y (P45,000 P2-,000) 1,000Inc!ease in &an$ (P45,000 ' P24,000) 21,000Inc!ease in %&ant assets [P300,000 (P225,000 P45,000)]

120,000

8oo$9i&& (/#&&) HHHHH0 ;ota& assets !e%o!te$ P1,15,000

I/ %a!tia&'oo$9i&& same ans9e! 9ith /#&&'oo$9i&& a%%!oach, since the!e is no ain.

54. " ste%'ac*#isition-0B @A, stocks iss#e$ -0,000 sha!es P-, /ai! vae P3-0,00030B @A o/ %!evio#s&y he&$ e*#ity inte!est 30,000 sha!es P5, /ai!vae

150,000

10B @A o/ =CI (100,000 -0,000 30,000) P, /ai! vae 40,000100B @ai! vae o/ s#"si$ia!y P5-0,0006ess @ai! vae o/ net assets (S?) o/ s#"si$ia!y 500,000

P -0,000

55. "5-. a5. a [(P00,000 + P0,000) + (34,000 sha!es P35)] P2,0,0005. $ 7ook vae o/ ssets (P0,000 + P50,000 + P200,000) P330,000 @ai! vae o/ ssets (P5,000 + P-0,000 + P250,000) 35,000

P -5,0005. a Ke!o, since the !evaation o/ P-5,000 is a&!ea$y !eco!$e$ in the "ooks o/ s#"si$ia!y

(not in the 9o!ksheet o! e&iminatin ent!ies.

-0. " (P250,000 P200,000)10 yea!s P5,000 $e%!eciation to !e$#ce net income o/Si!i#s.-1. $ Since, CC Co!%. is not a s#"si$ia!y, no e&imination o/ inte!com%any acco#nts 9i&& "e

ma$e. ;he!e/o!e, the P200,000 !emains to "e a !eceiva"&e. n the othe! han$, YY Co!%.is a conso&i$ate$ s#"si$ia!y, so the P300,000 inte!com%any acco#nt 9i&& "e e&iminate$.

-2. $-3. a


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-4. c In the com"ine$ Nnancia& statements (9hich no!ma&&y #se$ to $esc!i"e$ Nnancia&statements in a Ucommon cont!o&V sit#ation), inte!com%any acco#nts a!e e&iminate$ in/#&&.

-5. $ In conso&i$atin the s#"si$ia!yMs N#!es, a&& inte!com%any "a&ances m#st "ee&iminate$ in thei! enti!ety /o! ete!na& !e%o!tin %#!%oses. ven tho#h the s#"si$ia!yis &ess than /#&&y o9ne$, the %a!ent nonethe&ess cont!o&s it.

--. $ ;he ac*#isition metho$ conso&i$ates assets at /ai! vae at ac*#isition $ate !ea!$&ess o/the %a!ent>s %e!centae o9ne!shi%.

-. $ !e/e! to-2In conso&i$atin the s#"si$ia!yMs N#!es, a&& inte!com%any "a&ances m#st "e e&iminate$ inthei! enti!ety /o! ete!na& !e%o!tin %#!%oses. ven tho#h the s#"si$ia!y is &ess than/#&&y o9ne$, the %a!ent nonethe&ess cont!o&s it.

-. $ !e/e! to =o. -1-. c

n asset ac*#i!e$ in a "#siness com"ination is initia&&y vae$ at 100B ac*#isition'$ate /ai! vae an$ s#"se*#ent&y amo!tiKe$ its #se/#& &i/e.

Patent /ai! vae at an#a!y 1, 200........................................................ P45,000mo!tiKation /o! 2 yea!s (10 yea! &i/e)..................................................... (,000)Patent !e%o!te$ amo#nt ecem"e! 31, 2010.......................................... P3-,000

0. a PP ' "#i&$in............................................................................................ P510,000

;; "#i&$in ac*#isition'$ate /ai! vae P300,000mo!tiKation /o! 3 yea!s (10'yea! &i/e) (0,000) 210,000

Conso&i$ate$ "#i&$ins ............................................................................. P20,000'


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merger and 1# ne shares held 0ye former shareholders in Santi td. An essence$ theformer shareholders of Santi td no control 0oth entities !edro td and Santi td. ?heformer Santi td shareholders have a *#; interest in !edro td 1#:(1##+1#3. ?heASF argues that there has 0een a reverse acquisition$ and that Santi td is eGectively the acquirer of !edro td.

Reverse acquisition occurs hen the legal su0sidiary has this form of control over thelegal ,arent. ?he usual circumstance creating a reverse acquisition is here an entity (the legal ,arent) o0tains onershi, of the equity of another entity (the legal su0sidiary)0ut$ as ,art of the exchange transaction$ it issues enough voting equity as considerationfor control of the com0ined entity to ,ass to the oners of the legal su0sidiary.

?he key accounting eGect of deciding that Santi td is the acquirer is that the assets andlia0ilities of !edro ltd are to 0e valued at fair value. ?his is contrary to normal acquisitionaccounting$ 0ased on !edro td 0eing the legal ,arent of Santi td$ hich ould requirethe assets and lia0ilities of Santi td to 0e valued at fair value.

3. cP-0,000 a&&ocation to e*#i%ment is %#she$'$o9n to s#"si$ia!y an$ inc!eases"a&ance /!om P330,000 to P30,000. Conso&i$ate$ "a&ance is P420,000 %sP30,000.

;heories1.

c -. " 11. c 1-. $ 21. " 2-. $ 31 c 3-. $

2.

a . " 12. c 1. c 22. a 2. c 32. $ 3. $

3.

e . 13. $ 1. " 23. a 2. c 33. " 3. c

4.

e . 14. $ 1. c 24. " 2. $ 34. $ 3. "

5

.

" 10, a 15, " 20. c 25. c 30. " 35. $ 40. c

41.

c 4-.

" 51.

c 5-.

$

42.

c 4.

a 52.

" 5.

43.

c 4.

c 53.

a 5.

44.

c 4.

$ 54.

a 5.

45.

c 50,

" 55,

c -0.

Partial goodwill full goodwil

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