INDIRECT VALUATION- good will is the excess of consideration transferred, Non controlling interest (NCI) in the acquiree, and

held interest over the fair value of net assets required.

yung NCI sa stock acquisition siya

previously held interest eh may hawak ka nang stock sa acquiree before acquisition
for example may 10% trading ka

Consideration transferred FV
equity instruments 100,000.00 8.00 800,000.00
contingent consideration 200,000.00
consideration transferred/acquisition cost 1,000,000.00
fair value of net assets acquired 710,000.00
goodwill 290,000.00

ASSET ACQUISITION
a. statutory mereger acquiree extinguished
b. statutoy consolidation new entity is born

1. STATUTORY MERGER

ACQUIRER'S BOOKS (POP)

Current asset 350,000.00

Plant asset 810,000.00
Goodwill 290,000.00
Liabilities 450,000.00
ordinary shares 100,000.00
share premium 700,000.00
share premium-contingent consideration 200,000.00

*di makakagawa ng fs at acquisition date kasi di given yung bs ni Pop.

isasara na book ni acquiree kasi di na siya magooperate, lilipat na kay Pop

2. STOCK ACQUISITION acquiree not extinguished. Walang transfer ng lahat ng assets. Both companies s
bumuli k lang ng ownership/shares of stock. Magooperate pa rin si Sons
ACQUIRER'S BOOKS

investment in subsidiary 1,000,000.00

ordinary shares 100,000.00
share premium 700,000.00
share premium-contingent consideration 200,000.00
st (NCI) in the acquiree, and previously

asset contingency- cash or non cash ang bayad

stock contingency- stocks ang idadagdag na issue pag bumaba yung price ng stock

ng assets. Both companies still exist.

perate pa rin si Sons

NO GOODWILL. NO ASSET TRANSFER. Consideration transferred lang

magiissue ng new certififcates
 acquisition cost= payments received by the owners of acquiree
acquisition related cost= received by third parties (lawyers, etc)

1 GOODWILL
ACQUISITION ANALYSIS Fair Value
cash 200,000.00 90.00 18,000,000.00
contingent consideration 1,000,000.00 40% 400,000.00
equity instrument 50,000.00 80.00 4,000,000.00
consideration transferred 22,400,000.00
fair value of net asets acquired
assets 51,280,000.00
brand names 5,000,000.00
secret formulas 7,000,000.00
identifiable assets 63,280,000.00
liabs 47,400,000.00 15,880,000.00
Goodwill 6,520,000.00

BALANCE SHEET ACQUIRER's BOOKS

Cash 25,000,000.00 - 19,510,000.00
receivables 2,000,000.00 190,000.00
inventory 20,000,000.00 7,000,000.00
plant and equipment 99,500,000.00 40,000,000.00
trademarks 5,000,000.00 4,000,000.00
goodwill 6,520,000.00
brand names 5,000,000.00
secret formula 7,000,000.00
total assets 151,500,000.00

ordinary shares 2,000,000.00 100,000.00

share premium 55,000,000.00 3,400,000.00
liability for contingent consideration 400,000.00
current liab 500,000.00 400,000.00
noncurrent liab 70,000,000.00 47,000,000.00
treasury shares - 1,000,000.00
retained earnings 25,000,000.00 - 1,100,000.00
Total liab and equity 151,500,000.00

2 BARGAIN PURCHASE GAIN/GAIN ON ACQUISITION

ACQUISITION ANALYSIS Fair Value
cash 200,000.00 90.00 18,000,000.00
contingent consideration 1,000,000.00 40% 400,000.00
equity instrument 50,000.00 80.00 4,000,000.00
consideration transferred 22,400,000.00
fair value of net asets acquired
assets 51,280,000.00
brand names 5,000,000.00
secret formulas 7,000,000.00
noncompetiion contract agreement 10,000,000.00
identifiable assets 73,280,000.00
liabs 47,400,000.00 25,880,000.00
negative goodwill/Bargain purchase gain/gain on acquisition ( 3,480,000.00)

BALANCE SHEET ACQUIRER BOOKS

Cash 25,000,000.00 - 19,510,000.00
receivables 2,000,000.00 190,000.00
inventory 20,000,000.00 7,000,000.00
plant and equipment 99,500,000.00 40,000,000.00
trademarks 5,000,000.00 4,000,000.00
noncompetiion contract agreement 10,000,000.00
brand names 5,000,000.00
secret formula 7,000,000.00
Total assets 151,500,000.00

ordinary shares 2,000,000.00 100,000.00

share premium 55,000,000.00 3,400,000.00
liability for contingent consideration 400,000.00
current liab 500,000.00 400,000.00
noncurrent liab 70,000,000.00 47,000,000.00
treasury shares - 1,000,000.00
retained earnings 25,000,000.00 2,380,000.00
totAL LIAB NA DEQUITY 151,500,000.00
 Cash
receivables
inventory
plant and equipment
trademarks
goodwill
brand names
secret formula
ordinary shares
share premium
liability for contingent consideration
current liab
noncurrent liab
cash
POST COMBINATION
5,490,000.00 share premium
2,190,000.00 acquisition related expense (RE)
27,000,000.00 Cash
139,500,000.00
9,000,000.00
6,520,000.00
5,000,000.00
7,000,000.00
201,700,000.00

2,100,000.00
58,400,000.00
400,000.00
900,000.00
117,000,000.00
- 1,000,000.00
23,900,000.00
201,700,000.00

Cash
receivables
inventory
plant and equipment
trademarks
noncompetiion contract agreement
 brand names
secret formula
ordinary shares
share premium
liability for contingent consideration
current liab
noncurrent liab
cash
Bargain purchase gain/gain on acquisition

POST COMBINATION share premium

5,490,000.00 acquisition related expense (RE)
2,190,000.00 Cash
27,000,000.00
139,500,000.00
9,000,000.00
10,000,000.00
5,000,000.00
7,000,000.00
205,180,000.00

2,100,000.00
58,400,000.00
400,000.00
900,000.00
117,000,000.00
- 1,000,000.00
27,380,000.00
205,180,000.00
 90,000.00
190,000.00 NO ACCUM DEPRECIATION KASI CONSIDERED NEW MGA ASSETS
7,000,000.00 KASI KAKABILI MO PA LANG
40,000,000.00
4,000,000.00
6,520,000.00 REAL ACCOUNT
5,000,000.00
7,000,000.00
100,000.00
3,900,000.00
400,000.00
400,000.00
47,000,000.00
18,000,000.00

500,000.00
1,100,000.00
1,600,000.00

90,000.00
190,000.00
7,000,000.00
40,000,000.00
4,000,000.00
10,000,000.00
 5,000,000.00
7,000,000.00
100,000.00
3,900,000.00
400,000.00
400,000.00
47,000,000.00
18,000,000.00
(RE) 3,480,000.00 NOMINAL ACCOUNT, CLOSED TO RETAINED EARNING

500,000.00
1,100,000.00
1,600,000.00
 ACQUISITION ANAYSIS

consideration transferred
equity instrumetns of the acquirer
contingent consideration
total consideration transferred
fair value of net assets acquired book value fair value
asstes cash and receivables 200,000,000.00 200,000,000.00
inventories 600,000,000.00 400,000,000.00
PPE 7,500,000,000.00 7,300,000,000.00
customer contracts 25,000,000.00
in process r&b 300,000,000.00

liabilities current liab ( 400,000,000.00) ( 400,000,000.00)

long term ( 7,200,000,000.00) ( 7,300,000,000.00)
warranty liab ( 10,000,000.00)
Net assets 700,000,000.00 515,000,000.00
1 Goodwill

2 provisional value- amount assiged temporarily

di ka pa sure kasi sa fair value, kulang pa info mo
nagassign ka lang muna ng value
kasi dumating na yung balance sheet date kay nagtemporary amount ka mna ng PPE
you can adjust the value 1 year after date of acquisition
Bretrospective adjustment sa goodwill or bargain
 ACQUIRER's BOOKS
Jan 1, 20x5
Fair Value cash and receivables
700,000,000.00 inventories
50,000,000.00 PPE
750,000,000.00 customer contracts
in process r&b
goodwill
current liab
binago ni sir long term
warranty liab
contributed capital
liab for contingent consi

share premium
acquisition related cost (RE)
515,000,000.00 513,500,000.00 cash
235,000,000.00 236,500,000.00 tunay na goodwill

Mar 20x5 goodwill

PPE

rary amount ka mna ng PPE

 200,000,000.00
400,000,000.00
7,300,000,000.00
25,000,000.00
300,000,000.00
235,000,000.00
400,000,000.00
7,300,000,000.00
10,000,000.00
700,000,000.00
50,000,000.00

100,000,000.00
150,000,000.00
250,000,000.00

1,500,000.00
1,500,000.00
share issuance cost both are not expensed kahit acquisiotion related cost
debt issuance cost

equity instruments of acquirer 30,000 25

notes payable
contingent consideration 120,000 0.3
consideration transferred
fair value of net assets acquired
assets 1,104,000
liab 240,000
1.a goodwill

1.b cash 24,000

receivables 48,000
inventories 72,000
land 240,000
buildings 360,000
equipment 300,000
in process r&d 60,000
goodwill 102,000
common stock
share premium/additional paid in capital
notes payable
liab for contingent consi
accounts payable
other liabs

share premium/additional paid in capital 32,400

acquisition related ex (RE) 105,600
Cash

1.c ACQUIRER BOOKS POST COMBINATION

cash 276,000 - 114,000 162,000
receivables 96,000 48,000 144,000
inventories 288,000 72,000 360,000
land 108,000 240,000 348,000
buildings 480,000 360,000 840,000
equipment 432,000 300,000 732,000
in process r&d 60,000 60,000
goodwill 102,000 102,000
total assets 1,680,000 2,748,000
 a/p 216,000 72,000 288,000
other liab 240,000 168,000 408,000
liab for contingent consi 36,000 36,000
notes payable 180,000 180,000
common stock 720,000 300,000 1,020,000
additional paid in capital 240,000 417,600 657,600
retained earnings 264,000 - 105,600 158,400
1,680,000 2,748,000

2.b August 1, 20x5

building 24,000
goodwill 24,000

2.a goodwill 78,000

3.a equity instruments of acquirer 30,000 25

notes payable
contingent consideration
consideration transferred
fair value of net assets acquired
assets 1,104,000
liab 240,000
goodwill

3.b good will 24,000

liab for contingent consi

3.c.1 goodwill same same 126,000 di na siya affected kasi di allowed as retrosp

3.c.2 liab for contingent consi 12,000

gain on contingent consi 12,000

3.c.3.1 goodwill same same 126,000 di na siya affected kasi di allowed as retrosp

3.c.3.2 loss on contingent consideration 30,000

liab for contingent consi 30,000

3.c.3.3 nameet condition so magbabayad tayo

3.c.3.3.1 goodwill same same 126,000

3.c.3.3.2 liab for contingent consi 78,000

 loss on contingent consideration 42,000
cash 120,000

4 babaguhin yung contingent consideration sa number 3

di na based sa average income, kundi sa cash flows from operations of 360,000 or more
independent case to

equity instruments of acquirer 30,000 25

notes payable time value of money (lum
contingent consideration 120,000 0.35 0.96154
consideration transferred
fair value of net assets acquired
assets 1,104,000
liab 240,000
4.a goodwill

4.b cash 24,000

receivables 48,000
inventories 72,000
land 240,000
buildings 360,000
equipment 300,000
in process r&d 60,000
goodwill 106,385
common stock
share premium/additional paid in capital
notes payable
liab for contingent consi
accounts payable
other liabs

share premium/additional paid in capital 32,400

acquisition related ex (RE) 105,600
Cash

4.c.2 12.31.20x5
liability for contingent consideration 40,385
gain on contingent consideration

wala na tayong babayaran na liab kasi di naman umabot sa 360,000 yung cash flows eh. So recognize as gain mo n
di siyaretrospective adjustment kasi di to adjustment sa provisional valuye on acquisition date.
happening of event lag to

4.c.1 goodwill same same 106,385

 01.01.20x7
4.d 20x5 78,000 liability for contingent consideration
20x6 84,000 loss on continget consideration
average 81,000 cash
threshold 30,000
excess 51,000
twice 2
cash 102,000

5.a equity instruments of acquirer 30,000 25

notes payable
contingent consideration-cash 120,000 0.3
contingent consideration-stock
consideration transferred
fair value of net assets acquired
assets 1,104,000
liab 240,000
goodwill

5.b
cash 24,000
receivables 48,000
inventories 72,000
land 240,000
buildings 360,000
equipment 300,000
in process r&d 60,000
goodwill 120,000
common stock
share premium/additional paid in capital
notes payable
liab for contingent consi
liab for contingent consi
accounts payable
other liabs

share premium/additional paid in capital 32,400

acquisition related ex (RE) 105,600
Cash

5.c stock so no remeasurement sa dec 31 20x5

no gain or loss recognized
 sharepremium- conti consi 18,000
common stock 12,000
APIC 6,000

6
equity instruments of acquirer 30,000 25
notes payable
contingent consideration-cash 120,000 0.3
contingent consideration-stock
consideration transferred
fair value of net assets acquired
assets 1,104,000
liab 240,000
goodwill

cash 24,000
receivables 48,000
inventories 72,000
land 240,000
buildings 360,000
equipment 300,000
in process r&d 60,000
goodwill 102,000
common stock
share premium/additional paid in capital
notes payable
liab for contingent consi
liab for contingent consi
accounts payable
other liabs

share premium/additional paid in capital 32,400

acquisition related ex (RE) 105,600
Cash

01.01.20x7 (settlement date)

APIC 60,000
Common stock 60,000

7
equity instruments of acquirer 30,000 25
notes payable
contingent consideration-cash 120,000 0.3
 contingent consideration-stock
consideration transferred
fair value of net assets acquired
assets 1,104,000
liab 240,000
goodwill

actual acquisition date fair value of acquirers share 750,000

actual 01.01.20x7 fair value of acquirer's share 600,000
actual decrease in fair value 150,000
actual 01.01.20x7 fair value 20
addititonal number of shares 7,500

01.01.20x7 (settlement date)

APIC 75,000
Common stock 75,000

8
equity instruments of acquirer 30,000 25
notes payable
contingent consideration-cash 120,000 0.3
contingent consideration-stock
acquisition date, fv 750,000
estimate 12/31/20x5 510,000
estimated decrease 240,000
prob 0.4
expected value 96,000

consideration transferred
fair value of net assets acquired
assets 1,104,000
liab 240,000
goodwill

acquisition date fair value of acquirers share 750,000

actual 12.31.20x5 fair value fair value of acquirer's share 600,000
actual decrease in fair value 150,000
actual 12.31.20x5 fair value fair value 20
addititonal number of shares 7,500

12.31.20x5 (settlement date)

share premium-contingent consideration 96,000
Common stock
APIC
750,000
180,000
36,000
966,000

864,000
102,000

300,000
450,000
180,000
36,000
72,000
168,000

138,000
 750,000
180,000
60,000 goodwill unadjusted 102,000
990,000 adjustment 24,000
goodwil adjustment 126,000

864,000
126,000

24,000

cted kasi di allowed as retrospective adjustment not existing on acquisition date eh, kasi imbes na dec 31 20x4, 20x5 siya

cted kasi di allowed as retrospective adjustment not existing on acquisition date eh, kasi imbes na dec 31 20x4, 20x5 siya

settlement date na to, di na remeasurement date

 750,000.00
180,000.00
40,384.62
970,384.62

864,000.00
106,384.62

300,000
450,000
180,000
40,385
72,000
168,000

138,000

40,385

eh. So recognize as gain mo na to

sition date.
 40,385
61,615
102,000

750,000
180,000
36,000
18,000
984,000

864,000
120,000

300,000
450,000
180,000
36,000
18,000
72,000
168,000

138,000

if consition is not met:

sharepremium- conti consi 18,000
page 41 sa bo share premium from not meeting the conti evetn 18,000

750,000
180,000
36,000

966,000

864,000
102,000

300,000
450,000
180,000
36,000

72,000
168,000

138,000

750,000
180,000
36,000
 966,000

864,000
102,000

nalugi yung mga cquiree kaya magiisue ka ng 150,000 pesos worth na sahres

750,000 cash 24,000

180,000 receivables 48,000
36,000 inventories 72,000
land 240,000
buildings 360,000
equipment 300,000
in process r&d 60,000
goodwill 198,000
96,000 common stock 300,000
share premium/additional paid in capital 450,000
1,062,000 notes payable 180,000
liab for contingent consi 36,000
liab for contingent consi 96,000
864,000 accounts payable 72,000
198,000 other liabs 168,000

share premium/additional paid in capital 32,400

acquisition related ex (RE) 105,600
Cash 138,000

75,000
21,000
es na dec 31 20x4, 20x5 siya

es na dec 31 20x4, 20x5 siya