Del Fierro

ACCOUNT TITLES Riego

Carrying Amount
Cash 50,000,000 3,500,000
Accounts Receivable 3,000,000 1,500,000
Land 15,000,000 7,500,000
Buildings (net) 7,500,000 5,200,000
Construction Equipment 35,000,000 12,800,000
Construction Machines 42,000,000 22,000,000
Delivery Trucks 36,000,000 13,650,000

Accounts Payable 3,500,000 1,250,000

Loan – Banco de Oro 5,200,000
Loan – Metro Bank 17,500,000
Share Capital (1,000,000 shares at P50 par) 50,000,000 30,000,000
Share Premium 42,000,000 15,000,000
Revenues 85,250,000 7,000,000
Expenses 40,750,000 2,000,000
Net Income 44,500,000 5,000,000
Retained Earnings, January 1, 2021 32,350,000 10,700,000
Net Income 44,500,000 5,000,000
Dividends paid 1,350,000 1,000,000
Retained Earnings, December 31, 2021 75,500,000 14,700,000
 Requirement 1
Del Fierro Consideration Transferred:
Fair Values
3,500,000
1,500,000
8,750,000
4,300,000
15,250,000
23,500,000 Less: Fair Value of Net Identifiable Assets Acquired:
15,680,000

1,250,000
5,200,000

GOODWILL
Requirement 1
Consideration Transferred:
Cash (75,000,000 x 50%) 37,500,000
(75,000,000 x 50% x 0.7835) 29,381,250
Shares (150,000 shares x P60) 9,000,000
Land 5,000,000
Cash to be used in paying the loan from BDO 5,200,000
Cash to be used in paying liquidation costs 500,000
Less: Fair Value of Net Identifiable Assets Acquired:
Cash 3,500,000
Accounts Receivable 1,500,000
Land 8,750,000
Buildings (net) 4,300,000
Construction Equipment 15,250,000
Construction Machines 23,500,000
Delivery Trucks (15,680,000-4,850,000) 10,830,000
Total Assets 67,630,000
Less: Accounts Payable 1,250,000
GOODWILL
 Requirement 2
Riego Del Fierro
Cash 6,609,000 * 3,500,000
Accounts Receivable 3,000,000 1,500,000
Land 10,000,000 * 8,750,000
Buildings (net) 7,500,000 4,300,000
86,581,250 Construction Equipment 35,000,000 15,250,000
Construction Machines 42,000,000 23,500,000
Delivery Trucks 36,000,000 10,830,000
Goodwill 20,201,250 -
TOTAL ASSETS

Cash of Riego Corp. before acquisition 50,000,000

Less: Cash paid 37,500,000
Cash paid for BDO loan 5,200,000
66,380,000 Cash paid to cover liquidation costs 500,000
20,201,250 Cash used for acquisition related costs 191,000
Cash of Riego Corp. after acquisition 6,609,000

Land of Riego Corp. before acquisition 15,000,000

Less: Land given as part of consideration 5,000,000
Land of Riego Corp. after acquisition 10,000,000
 Requirement 3
Share Capital
Total
Share Capital, Riego
10,109,000 Shares issued upon acquisition
4,500,000 Share Premium
18,750,000 Share Premium, Riego
11,800,000 Share premium on shares issued upon acquisition
50,250,000 Less: Stock Issuance Cost
65,500,000 Retained Earnings, December 31, 2021
46,830,000 Retained Earnings, January 1, 2021
20,201,250 Net Income
227,940,250 Revenues
Expenses (40,750,000+75,000)
Dividends paid
TOTAL SHAREHOLDERS' EQUITY
 50,000,000
7,500,000 57,500,000

42,000,000
1,500,000
116,000 43,384,000

32,350,000

85,250,000
40,825,000 44,425,000
1,350,000 75,425,000
176,309,000
Consideration transferred:
Shares (150,000 x P80) 12,000,000
Contingent performance liability (218,000 + 50,000) 268,000 12,268,000
Less: Fair value of net identifiable assets acquired
Cash 1,500,000
Receivables 235,000
Inventories 5,750,000
Property, plant and Equipment (net) 2,250,000
Customer list 32,000
Customer contract 15,000
Order backlog 25,000
Internet domain name 36,000
Trademark 42,000
Trade secret processes 25,600
Mask works 35,880
Subscriber list 14,250
In process research and development 62,300
Completed technology 14,785
Deferred tax assets* 360,000
Current liabilities - 1,245,000
Long-term debt - 910,000
Deferred tax liabilities** - 158,345 8,084,470
GOODWILL 4,183,530

Goodwill 75,210
Assembled workforce 123,500
Potential contracts with prospective customers 48,560

Broader customer base 22,530

Technically skilled workforce 47,510
Advertising jingles 16,300
Future cost savings 36,230

Moreover, fair value adjustments to the assets acquired and liabilities assumed have deferred tax consequen
 Fair Values
Cash 1,500,000
Receivables 235,000
Inventories 5,750,000
Property, plant and Equipment (net) 2,250,000
Customer list 32,000
Customer contract 15,000
Order backlog 25,000
Internet domain name 36,000
Trademark 42,000
Trade secret processes 25,600
Mask works 35,880
Subscriber list 14,250
In process research and development 62,300
Completed technology 14,785
Current liabilities 1,245,000
Long-term debt 910,000

*Deferred Tax Asset

**Deferred Tax Liability (45,000+9,600+4,500+7,500+10,800+12,600+7,680+10,764+4,275+18,690+

deferred tax consequence, but do not affect the tax bases of the assets and liabilities. The tax rate is 30%
 Carrying Amounts TTD/(DTD) DTA/(DTL)
1,500,000 ### ###
235,000 ### ###
5,600,000 150,000 - 45,000
3,450,000 - 1,200,000 360,000
### 32,000 - 9,600
### 15,000 - 4,500
### 25,000 - 7,500
### 36,000 - 10,800
### 42,000 - 12,600
### 25,600 - 7,680
### 35,880 - 10,764
### 14,250 - 4,275
### 62,300 - 18,690
### 14,785 - 4,436
1,245,000 ###
985,000 75,000 - 22,500

360,000
600+7,680+10,764+4,275+18,690+4,436+22,500) 158,345
Consideration Transferred 5,200,000
Non-controlling Interest 250,000
Total 5,450,000
Less: Fair value of net identifiable assets acquired
Assets (8,520,000+85,000) 8,605,000
Less: Liabilities (5,680,000+75,000) 5,755,000 2,850,000
GOODWILL 2,600,000
Consideration transferred:
Deffered Payment (3,600,000 x 40% x 0.6209) 894,096
Deffered Payment (3,600,000 x 60% x 0.5645) 1,219,320
Land 640,000
Shares (20,000 x P14) 280,000 3,033,416
Less: Fair value of net identifiable assets acquired
Assets 6,780,000
Less: Liabilities (1,340,000 + 165,000) 1,505,000 5,275,000
GAIN ON BARGAIN PURCHASE 2,241,584
Consideration transferred:
Cash 2,000,000
Shares (25,000 x P40) 1,000,000 3,000,000
Add: Acquisition-related costs
Finder's fees 22,000
Accountant's fees 16,000
Legal fees 12,500 50,500
Total 3,050,500
Less: Interest in net assets of acquiree (3,720,000 x 75%) 2,790,000
GOODWILL 260,500
Consideration transferred (squeeze) 2,475,000
Non-controlling interest -
Previously held equity interest -
Total 2,475,000
Less: Fair value of net identifiable assets acquired
Assets (545,000 + 1,640,000) 2,185,000
Less: Liabilities 300,000 1,885,000
GOODWILL 590,000

Consideration transferred 2,475,000

Fair Value per share 55
Number of shares issued 45,000
Consideration transferred 600,000
Non-controlling interest (600,000 / 80% x 20%) 150,000
Total 750,000
Less: Fair value of net identifiable assets acquired
Cash 70,000
Inventory 220,000
Plant Assets (net) 640,000
Less: Liabilities 260,000 670,000
GOODWILL 80,000
Consideration transferred 325,000
Non-controlling interest (315,000 x 25%) 78,750
Total 403,750
Less: Fair value of net identifiable assets acquired
Assets 525,000
Less: Liabilities 210,000 315,000
GOODWILL 88,750