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Q3S Set A Business Combinations 1
Q3S Set A Business Combinations 1
MIDTERM QUIZ
QUIZ 1
PROBLEM A
1.) Consideration transferred 37,500 P40 1,500,000
Contingent libilities 200,000
Total acquisition cost 1,700,000
Less: Acquiree net assets @ FMV 1,800,000
Income form acquisition (100,000)
PROBLEM B
4.) Acquisition cost
Issued shares (20,000 shares * 2 * P1.10) 44,000
Cash (10,000 shares * P2.50 * 50%) 12,500
Liability - present value (12,500 * 0.90909) 11,364
Total 67,864
Less: FMV of Acquiree's net assets
Equipment - net 30,000
Inventory 20,000
Accounts receivable 10,000
Patent 15,000 75,000
5.) Gain from acquisition (7,136)
Note: Cash was used to settle accounts payable and payment of liquidation cost
PROBLEM C
6.) Previously held interest
Investment - January 1, 2010 100,000
Share in net income 90,000
Amortization of excess (16,000)
Dividends received (24,000) 50,000
Carrying value 150,000
Multiply by: 110% 165,000
Additional investment - consideration given 585,000
Noncontrolling interest 175,000
Acquisition cost 925,000
Computation of NCI - proportionate share on Subsidiary net asset measured at Fair value
Subsidiary net asset at Fair Value (165,000 / 20%) 825,000
Multiply by: Noncontrolling interest 20%
Proportionate share 165,000
QUIZ 2
Problem A
Goodwill 24,800.00
Add: Subsidiary stockholders equity @ fair value 69,000.00
Consideration transferred 93,800.00
PROBLEM B
Controlling interest (36,000 / 40,000) 90.00%
Allocation of goodwill
7.) Consolidated net income attributable to parent for year 2014 - P467,900
8.) Consolidated net income attributable to NCI for year 2014 - P5,100
Year 2015
Total NCI
Parent retained earnings - 12/31/2013 1,050,000
Acquisition expense (50,000)
Accumulated net income 777,350
Accumulated dividends declared (300,800)
Parent retained earnings - 12/31/2015 1,476,550 -
Non-controlling interest - 12/31/2013 120,000
Undistributed net income for 2014 & 2015 130,000 13,000
Amortization of excess - cumulative (32,000) (3,200)
Impairment of goodwill - cumulative (35,000) (3,500)
Consolidated balance 126,300
9.) Consolidated retained earnings December 31, 2015 - P1,533,250
10.) Non-controlling interest December 31, 2015 - P126,300
ation cost
- higher
CNI
458,000
(36,000)
90,000
(29,000)
(10,000)
473,000
Consolidated
Retained Earnings
1,050,000
(50,000)
777,350
(300,800)
1,476,550
117,000
(28,800)
(31,500)
1,533,250