Plant and equipment 139,500,000

Trademarks 9,000,000 Common stock 2,100,000

Brand names 5,000,000 Paidin capital – par 58,400,000
Secret formulas 7,000,000 Retained earnings* 23,900,000
Goodwill __6,120,,000 Treasury stock ( 1,000,000)
Total P201,300,000 Total P 201,300,000

*25,000,000 – 1,100,000, merger expenses = 23,900,000.

Post-Combination Balance Sheet: (requirement 2)

Assets Liabilities and Stockholders’ Equity
Cash P 5,490,000 Current liabilities P 900,000
Receivables 2,190,000 Long-term liabilities 117,000,000
Inventories 27,000,000
Plant and equipment 139,500,000
Trademarks 9,000,000 Common stock 2,100,000
Brand names 5,000,000 Paidin capital – par 58,400,000
Secret formulas 7,000,000 Retained earnings* 27,780,000
Noncompetition agreement _10,000,,000 Treasury stock __( 1,000,000)
Total P205,180,000 Total P 205,180,000

*25,000,000 – 1,100,000 + 3,880,000 = 27,780,000

Problem II
1. (in millions)
Cash and receivables 200
Inventories 400
Property, plant & equipment 5,500
Customer contracts 25
In-process R&D 300
Goodwill 2,035
Current liabilities 400
Long-term debt 7,300
Warranty liability 10
Estimated liability for Contigent Cons. 50
Capital stock 700

Note: Read the topic “Items included in Goodwill” in Chapter 14 about “Skilled (assembled)
workforce” (they are not identifiable at the date of acquisition) and “Potential Contracts” (they
are not qualified as assets at the acquisition date).

Consideration transferred:
Shares 700,000,000
Estimated liability for Contigent Cons. _50,000,000
Consideration transferred 750,000,000
Less: MV of Assets and Liabilities Acquired:
Cash and receivables 200,000,000
Inventories 400,000,000
Property, plant & equipment 5,500,000,000
Customer contracts 25,000,000
In-process R&D 300,000,000
Current liabilities ( 400,000,000)
Long-term debt (7,300,000,000)
Warranty liability ( 10,000,000) (1,285,000,000
)
 Positive excess: Goodwill 2,035,000,000

Acquisition expenses
Acquisition/merger expenses 150
Cash 150

Costs to Issue and Register Stocks

Share Issue Costs 100
Cash 100

2. (in millions)
Goodwill 1,500
Property, plant & equipment 1,500

Problem III
1.
Current assets 1,500,000
Investments 500,000
Land 6,000,000
Buildings 16,000,000
Equipment 2,000,000
Identifiable intangibles 5,000,000
Goodwill 22,500,000
Current liabilities 1,500,000
Long-term liabilities 12,000,000
Common stock 4,000,000
Additional paid-in capital 36,000,000
Cash 1,100,000

Consideration transferred:
Shares (400,000 x P100) 40,000,000
Less: MV of Assets and Liabilities Acquired:
Current assets 1,500,000
Investments 500,000
Land 6,000,000
Buildings 16,000,000
Equipment 2,000,000
Identifiable intangibles 5,000,000
Current liabilities ( 1,500,000)
Long-term liabilities (12, 000,000) (17,500,000)
Positive excess: Goodwill 22,500,000

Costs to Issue and Register Stocks

Share Issue Costs/APIC 1,100
Cash 1,100
2.
Current assets 1,500,000
Investments 500,000
Land 6,000,000
Buildings 16,000,000
Equipment 2,000,000
Identifiable intangibles 5,000,000
Current liabilities 1,500,000