STOCK ACQUISITION

Consolidated Statement of Financial Position - Date of Acquisition

ACQUISITION OF A WHOLLY-OWNED SUBSIDIARY

Case 1: Acquisition at Book Value

P Company acquires all of S Company's outstanding common stock for P100,000 cash. The consideration given (price paid) of P100,000 equal to the book value of the subsidiary's net assets as shown below:

Consideration given 100,000.00

Less: Book value of interest acquired (100%)
OS Capital, S Company 50,000.00
APIC - S Company 30,000.00
Retained earnings - S Company 20,000.00 100,000.00
EXCESS -

ACQUIRER'S BOOKS

Investment in S Company 100,000.00

Cash 100,000.00

Below is the Statements of Financial Position of P Company and S Company as of Decemer 1, 2019:

P Company and S Company

Statements of Financial Position
December 1, 2019
P Company S Company
Assets
Cash 130,000.00 -
Accounts Receivable 40,000.00 32,000.00
Inventory 50,000.00 20,000.00
Equipment, net 180,000.00 158,000.00
Investment in S Company 100,000.00 -
Total Assets 500,000.00 210,000.00

Liabilities and Shareholders' Equity

Accounts payable 280,000.00 110,000.00
OS Capital 100,000.00 50,000.00
Additional paid-in capital 80,000.00 30,000.00
Retained earnings 40,000.00 20,000.00
Total Liabilities and Shareholders' Equity 500,000.00 210,000.00

P Company and S Company

Consolidation Working Paper
December 1, 2019

Eliminating entries
P Company S Company Debit Credit Consolidated
Assets
Cash 130,000.00 - 130,000.00
Accounts Receivable 40,000.00 32,000.00 72,000.00 Almira Diosa De
Inventory 50,000.00 20,000.00 70,000.00 Castro:
Eliminated to add
Equipment, net 180,000.00 158,000.00 338,000.00 assets and liabilities
Investment in S Company 100,000.00 - 100,000.00 -
Total Assets 500,000.00 210,000.00 610,000.00

Liabilities and Shareholders' Equity Almira Diosa De

Castro
Accounts payable 280,000.00 110,000.00 390,000.00
OS Capital 100,000.00 50,000.00 50,000.00 100,000.00 Parent's only
Additional paid-in capital 80,000.00 30,000.00 30,000.00 80,000.00
Parent's only
Retained earnings 40,000.00 20,000.00 20,000.00 40,000.00
Almira Diosa De Castro:
Total Liabilities and Shareholders' Equity 500,000.00 210,000.00 610,000.00 Parent's only
Eliminating entries are recorded in
neither the parent's nor the
subsidiary's books; it is only part of
Eliminating entry the working paper for the
preparation of the consolidated
statement of financial position
OS Capital - S Company 50,000.00
Additional paid-in capital - S Company 30,000.00
Retained earnings - S Company 20,000.00
Investment in S Company 100,000.00

P Company and Subsidiary

Consolidated Statement of Financial Position
December 1, 2019

Assets
Cash 130,000.00
Accounts Receivable 72,000.00
Inventory 70,000.00
Equipment, net 338,000.00
Total Assets 610,000.00

Liabilities and Shareholders' Equity

Accounts payable 390,000.00
OS Capital 100,000.00
Additional paid-in capital 80,000.00
Retained earnings 40,000.00
Total Liabilities and Shareholders' Equity 610,000.00

# Classification: Confidential
Consolidated Statement of Financial Position - Date of Acquisition
ACQUISITION OF A WHOLLY-OWNED SUBSIDIARY

Case 2: Acquisition at more than Book Value

P Company acquires all of S Company's outstanding common stock for P110,000 cash on December 1, 2019

Consideration given
Less: Book value of interes acquired (100%)
OS Capital, S Company 50,000.00
APIC - S Company 30,000.00
Retained earnings - S Company 20,000.00
Goodwill

ACQUIRER'S BOOKS

Investment in S Company 110,000.00

Cash 110,000.00

Below is the Statements of Financial Position of P Company and S Company as of Decemer 1, 2019:

P Company and S Company

Statements of Financial Position
December 1, 2019
P Company
Assets
Cash 120,000.00
Accounts Receivable 40,000.00
Inventory 50,000.00
Equipment, net 180,000.00
Investment in S Company 110,000.00
Total Assets 500,000.00

Liabilities and Shareholders' Equity

Accounts payable 280,000.00
OS Capital 100,000.00
Additional paid-in capital 80,000.00
Retained earnings 40,000.00
Total Liabilities and Shareholders' Equity 500,000.00

P Company and S Company

Consolidation Working Paper

# Classification: Confidential
December 1, 2019

P Company
Assets
Cash 120,000.00
Accounts Receivable 40,000.00
Inventory 50,000.00
Equipment, net 180,000.00
Goodwill
Investment in S Company 110,000.00
Total Assets 500,000.00

Liabilities and Shareholders' Equity

Accounts payable 280,000.00
OS Capital 100,000.00
Additional paid-in capital 80,000.00
Retained earnings 40,000.00
Total Liabilities and Shareholders' Equity 500,000.00

Eliminating entry

OS Capital - S Company 50,000.00

Additional paid-in capital - S Company 30,000.00
Retained earnings - S Company 20,000.00
Goodwill 10,000.00
Investment in S Company

P Company and Subsidiary

Consolidated Statement of Financial Position
December 1, 2019

Assets
Cash 120,000.00
Accounts Receivable 72,000.00
Inventory 70,000.00
Equipment, net 338,000.00
Goodwill 10,000.00
Total Assets 610,000.00

Liabilities and Shareholders' Equity

Accounts payable 390,000.00
OS Capital 100,000.00

# Classification: Confidential
Additional paid-in capital 80,000.00
Retained earnings 40,000.00
Total Liabilities and Shareholders' Equity 610,000.00

# Classification: Confidential
P110,000 cash on December 1, 2019.

110,000.00

100,000.00
10,000.00

pany as of Decemer 1, 2019:

S Company

-
32,000.00
20,000.00
158,000.00
-
210,000.00

110,000.00
50,000.00
30,000.00
20,000.00
210,000.00

# Classification: Confidential
 Eliminating entries
S Company Debit Credit Consolidated

- 120,000.00
32,000.00 72,000.00
20,000.00 70,000.00
158,000.00 338,000.00 Almira Diosa De Castro:
10,000.00 10,000.00 Added to recognize excess
payments on subsidiary's
- 110,000.00 - shares
210,000.00 610,000.00

110,000.00 390,000.00
50,000.00 50,000.00 100,000.00
30,000.00 30,000.00 80,000.00
20,000.00 20,000.00 40,000.00
210,000.00 610,000.00

110,000.00

# Classification: Confidential
# Classification: Confidential
# Classification: Confidential
# Classification: Confidential
# Classification: Confidential
Consolidated Statement of Financial Position - Date of Acquisition
ACQUISITION OF A WHOLLY-OWNED SUBSIDIARY

Case 3: Acquisition at less than Book Value

P Company acquires all of S Company's outstanding common stock for P80,000 cash. The consideration give

Consideration given
Less: Book value of interes acquired (100%)
OS Capital, S Company 50,000.00
APIC - S Company 30,000.00
Retained earnings - S Company 20,000.00
Gain on Bargain Purchase

ACQUIRER'S BOOKS

Investment in S Company 80,000.00

Cash 80,000.00

Below is the Statements of Financial Position of P Company and S Company as of Decemer 1, 2019:

P Company and S Company

Statements of Financial Position
December 1, 2019
P Company
Assets
Cash 150,000.00
Accounts Receivable 40,000.00
Inventory 50,000.00
Equipment, net 180,000.00
Investment in S Company 80,000.00
Total Assets 500,000.00

Liabilities and Shareholders' Equity

Accounts payable 280,000.00
OS Capital 100,000.00
Additional paid-in capital 80,000.00
Retained earnings 40,000.00
Total Liabilities and Shareholders' Equity 500,000.00

P Company and S Company

Consolidation Working Paper

# Classification: Confidential
December 1, 2019

P Company
Assets
Cash 150,000.00
Accounts Receivable 40,000.00
Inventory 50,000.00
Equipment, net 180,000.00
Investment in S Company 80,000.00
Total Assets 500,000.00

Liabilities and Shareholders' Equity

Accounts payable 280,000.00
OS Capital 100,000.00
Additional paid-in capital 80,000.00
Retained earnings 40,000.00
Total Liabilities and Shareholders' Equity 500,000.00

Eliminating entry

OS Capital - S Co,mpany 50,000.00

Additional paid-in capital - S Company 30,000.00
Retained earnings - S Company 20,000.00
Investment in S Company
Retained earnings - P Company (Gain)

P Company and Subsidiary

Consolidated Statement of Financial Position
December 1, 2019

Assets
Cash 150,000.00
Accounts Receivable 72,000.00
Inventory 70,000.00
Equipment, net 338,000.00
Total Assets 630,000.00

Liabilities and Shareholders' Equity

Accounts payable 390,000.00
OS Capital 100,000.00
Additional paid-in capital 80,000.00
Retained earnings 60,000.00
Total Liabilities and Shareholders' Equity 630,000.00

# Classification: Confidential
# Classification: Confidential
P80,000 cash. The consideration given (price paid) of P100,000 equal to the book value of the subsidiary's net assets as shown

80,000.00

100,000.00
(20,000.00)

pany as of Decemer 1, 2019:

S Company

-
32,000.00
20,000.00
158,000.00
-
210,000.00

110,000.00
50,000.00
30,000.00
20,000.00
210,000.00

# Classification: Confidential
 Eliminating entries
S Company Debit Credit Consolidated

- 150,000.00
32,000.00 72,000.00
20,000.00 70,000.00
158,000.00 338,000.00
- 80,000.00 -
210,000.00 630,000.00

110,000.00 390,000.00
50,000.00 50,000.00 100,000.00
30,000.00 30,000.00 80,000.00
Almira Diosa De Castro:
20,000.00 20,000.00 20,000.00 60,000.00 Gain on Bargain Purchase
210,000.00 630,000.00

80,000.00
20,000.00

# Classification: Confidential
# Classification: Confidential
s net assets as shown below:

# Classification: Confidential
# Classification: Confidential
# Classification: Confidential
Consolidated Statement of Financial Position - Date of Acquisition
ACQUISITION OF A PARTIALLY-OWNED SUBSIDIARY

Case 4: Acquisition at More than Fair Value with adjustment of subsidiary accounts

Below are the Statements of Financial Position of P Company and S Company as of Decemer 1, 2019:

P Company and S Company

Statements of Financial Position
December 1, 2019
P Company
Assets
Cash 218,000.00
Accounts Receivable 144,000.00
Inventory 160,000.00
Land 200,000.00
Building, net 840,000.00
Equipment, net 400,000.00
Total Assets 1,962,000.00

Liabilities and Shareholders' Equity

Liabilities
Accounts payable 160,000.00
Bonds payable 400,000.00
Total liabilities 560,000.00

Shareholders' equity
OS Capital 400,000.00
Additional paid-in capital 500,000.00
Retained earnings 502,000.00
Total Shareholder's Equity 1,402,000.00
Total Liabilities and Shareholders' Equity 1,962,000.00

P Company issued 16,000 shares of its P10 par value common stock for 80% of the outstanding shares of S C
Company also pays P50,000 professional fees to accomplish the acquisition.

Price Paid
Noncontrolling interest
Total
Less: Fair value of interest acquired (100%)
Goodwill

# Classification: Confidential
ACQUIRER'S BOOKS
Investment in S Company 800,000.00
OS Capital 160,000.00
APIC 640,000.00

Retained earnings 50,000.00

Cash 50,000.00

Fair Value Parent (80%)

Book Value 320,000.00 256,000.00
Changes BV to FV 300,000.00 240,000.00
Goodwill (SQUEEZE) 350,000.00 304,000.00
FV of Subsidiary 970,000.00 800,000.00

P Company and S Company

Consolidation Working Paper
December 1, 2019

P Company
Assets
Cash 168,000.00
Accounts Receivable 144,000.00
Inventory 160,000.00
Land 200,000.00
Building, net 840,000.00
Equipment, net 400,000.00
Investment in S 800,000.00
Goodwill
Total Assets 2,712,000.00

Liabilities and Shareholders' Equity

Liabilities
Accounts payable 160,000.00
Bonds payable 400,000.00
Shareholders' equity
OS Capital 560,000.00
Additional paid-in capital 1,140,000.00
Retained earnings 452,000.00
NCI
Total Liabilities and Shareholders' Equity 2,712,000.00

ELIMINATING ENTRIES

# Classification: Confidential
OS Capital - S Company 20,000.00
Additional paid-in capital - S Company 180,000.00
Retained earnings - S Company 120,000.00
Investment in S
Noncontrolling interest

Inventory 10,000.00
Land 50,000.00
Building, net 200,000.00
Equipment, net 40,000.00
Goodwill 350,000.00
Investment in S
Noncontrolling interest

P Company and Subsidiary

Consolidated Statement of Financial Position
December 1, 2019

Assets
Cash
Accounts Receivable
Inventory
Total Current Assets

Land
Building, net
Equipment, net
Goodwill
Total Non-current Assets
TOTAL ASSETS

Liabilities and Shareholders' Equity

Liabilities
Accounts payable
Bonds payable
Total Liabilities

Shareholders' equity
OS Capital
Additional paid-in capital
Retained earnings
Non-controlling interest
Total Shareholders' Equity
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

# Classification: Confidential
# Classification: Confidential
ary accounts

ny as of Decemer 1, 2019:

S Company
Book Value Fair Value
-
40,000.00 40,000.00
100,000.00 110,000.00
80,000.00 130,000.00
300,000.00 500,000.00
80,000.00 120,000.00
600,000.00 900,000.00

80,000.00 80,000.00
200,000.00 200,000.00
280,000.00 280,000.00

20,000.00
180,000.00
120,000.00
320,000.00
600,000.00

% of the outstanding shares of S Company. The fair value of P Company's stock is P50 and the fair value od the 20% NCI is ass

800,000.00
170,000.00
970,000.00
620,000.00
350,000.00

# Classification: Confidential
 Almira Diosa De Castro: (STUDY GUIDE)
This was my computation table used during my board exams.
Subsidiary (20%)
64,000.00 BV and Changes from BV to FV should always be separated for
elimintaing entries purposes.
60,000.00
46,000.00 FV of Subsidiary for NCI should not be less than the book value AT ALL
170,000.00 TIMES

Share on Goodwill is NEVER multiplied on 80% of interest.

Eliminating entries
S Company Debit Credit Consolidated

- 168,000.00
40,000.00 184,000.00
100,000.00 10,000.00 270,000.00
80,000.00 50,000.00 330,000.00
300,000.00 200,000.00 1,340,000.00
80,000.00 40,000.00 520,000.00
800,000.00 -
350,000.00 350,000.00
600,000.00 3,162,000.00

80,000.00 240,000.00
200,000.00 600,000.00
-
20,000.00 20,000.00 560,000.00
180,000.00 180,000.00 1,140,000.00
120,000.00 120,000.00 452,000.00
170,000.00 170,000.00
600,000.00 3,162,000.00

# Classification: Confidential
 256,000.00
64,000.00

544,000.00
106,000.00

168,000.00
184,000.00
270,000.00
622,000.00

330,000.00
1,340,000.00
520,000.00
350,000.00
2,540,000.00
3,162,000.00

240,000.00
600,000.00
840,000.00

560,000.00
1,140,000.00
452,000.00
170,000.00
2,322,000.00
3,162,000.00

# Classification: Confidential
# Classification: Confidential
od the 20% NCI is assessed to be P170,000. P

# Classification: Confidential
# Classification: Confidential
# Classification: Confidential
# Classification: Confidential
Consolidated Statement of Financial Position - Date of Acquisition
ACQUISITION OF A PARTIALLY-OWNED SUBSIDIARY

Case 5: Acquisition at LESS than Fair Value with adjustment of subsidiary accounts

Below are the Statements of Financial Position of P Company and S Company as of Decemer 1, 2019:

P Company and S Company

Statements of Financial Position
December 1, 2019
P Company
Assets
Cash 218,000.00
Accounts Receivable 144,000.00
Inventory 160,000.00
Land 200,000.00
Building, net 840,000.00
Equipment, net 400,000.00
Total Assets 1,962,000.00

Liabilities and Shareholders' Equity

Liabilities
Accounts payable 160,000.00
Bonds payable 400,000.00
Total liabilities 560,000.00

Shareholders' equity
OS Capital 400,000.00
Additional paid-in capital 500,000.00
Retained earnings 502,000.00
Total Shareholder's Equity 1,402,000.00
Total Liabilities and Shareholders' Equity 1,962,000.00

P Company issued 8,000 shares of its P10 par value common stock for 80% of the outstanding shares of S C

Price Paid
Noncontrolling interest
Total
Less: Fair value of interest acquired (100%)
Gain on Bargain Purchase

# Classification: Confidential
ACQUIRER'S BOOKS
Investment in S Company 400,000.00
OS Capital 80,000.00
APIC 320,000.00

Retained earnings 50,000.00

Cash 50,000.00

Fair Value Parent (80%)

Book Value 320,000.00 256,000.00
Changes BV to FV 300,000.00 240,000.00
Gain on Bargain Purchase (SQUEEZE) (96,000.00) (96,000.00)
FV of Subsidiary 524,000.00 400,000.00

P Company and S Company

Consolidation Working Paper
December 1, 2019

P Company
Assets
Cash 168,000.00
Accounts Receivable 144,000.00
Inventory 160,000.00
Land 200,000.00
Building, net 840,000.00
Equipment, net 400,000.00
Investment in S 400,000.00
Total Assets 2,312,000.00

Liabilities and Shareholders' Equity

Liabilities
Accounts payable 160,000.00
Bonds payable 400,000.00
Shareholders' equity
OS Capital 480,000.00
Additional paid-in capital 820,000.00
Retained earnings 452,000.00
NCI
Total Liabilities and Shareholders' Equity 2,312,000.00

ELIMINATING ENTRIES
OS Capital - S Company 20,000.00

# Classification: Confidential
Additional paid-in capital - S Company 180,000.00
Retained earnings - S Company 120,000.00
Investment in S
Noncontrolling interest

Inventory 10,000.00
Land 50,000.00
Building, net 200,000.00
Equipment, net 40,000.00
Retained Earnings
Investment in S
Noncontrolling interest

P Company and Subsidiary

Consolidated Statement of Financial Position
December 1, 2019

Assets
Cash
Accounts Receivable
Inventory
Total Current Assets

Land
Building, net
Equipment, net
Total Non-current Assets
TOTAL ASSETS

Liabilities and Shareholders' Equity

Liabilities
Accounts payable
Bonds payable
Total Liabilities

Shareholders' equity
OS Capital
Additional paid-in capital
Retained earnings
Non-controlling interest
Total Shareholders' Equity
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

# Classification: Confidential
# Classification: Confidential
ecemer 1, 2019:

S Company
Book Value Fair Value
-
40,000.00 40,000.00
100,000.00 110,000.00
80,000.00 130,000.00
300,000.00 500,000.00
80,000.00 120,000.00
600,000.00 900,000.00

80,000.00 80,000.00
200,000.00 200,000.00
280,000.00 280,000.00

20,000.00
180,000.00
120,000.00
320,000.00
600,000.00

tanding shares of S Company. The fair value of P Company's stock is P50. P Company also pays P50,000 professional fees to

400,000.00
124,000.00
524,000.00
620,000.00
(96,000.00)

# Classification: Confidential
 Almira Diosa De Castro: (STUDY GUIDE)
Subsidiary (20%) This was my computation table used during my board exams.
64,000.00
BV and Changes from BV to FV should always be separated for
60,000.00 elimintaing entries purposes.
-
FV of Subsidiary for NCI should not be less than the book value AT ALL
124,000.00
TIMES

Share on Goodwill is NEVER multiplied on 80% of interest.

Eliminating entries
S Company Debit Credit Consolidated

- 168,000.00
40,000.00 184,000.00
100,000.00 10,000.00 270,000.00
80,000.00 50,000.00 330,000.00
300,000.00 200,000.00 1,340,000.00
80,000.00 40,000.00 520,000.00
400,000.00 -
600,000.00 2,812,000.00

80,000.00 240,000.00
200,000.00 600,000.00
-
20,000.00 20,000.00 480,000.00
180,000.00 180,000.00 820,000.00
120,000.00 120,000.00 96,000.00 548,000.00
124,000.00 124,000.00
600,000.00 2,812,000.00

# Classification: Confidential
 256,000.00
64,000.00

96,000.00
144,000.00
60,000.00

168,000.00
184,000.00
270,000.00
622,000.00

330,000.00
1,340,000.00
520,000.00
2,190,000.00
2,812,000.00

240,000.00
600,000.00
840,000.00

480,000.00
820,000.00
548,000.00
124,000.00
1,972,000.00
2,812,000.00

# Classification: Confidential
# Classification: Confidential
0 professional fees to accomplish the acquisition.

# Classification: Confidential
# Classification: Confidential
# Classification: Confidential
# Classification: Confidential
Consolidated Statement of Financial Position - Date of Acquisition
SUBSIDIARY'S PRE-EXISTING GOODWILL

NB: The example is the same with Case 4. The only difference is on GOODWILL.

Below are the Statements of Financial Position of P Company and S Company as of Decemer 1, 2019:

P Company and S Company

Statements of Financial Position
December 1, 2019
P Company
Assets
Cash 218,000.00
Accounts Receivable 144,000.00
Inventory 160,000.00
Land 200,000.00
Building, net 840,000.00
Equipment, net 400,000.00
Goodwill -
Total Assets 1,962,000.00

Liabilities and Shareholders' Equity

Liabilities
Accounts payable 160,000.00
Bonds payable 400,000.00
Total liabilities 560,000.00

Shareholders' equity
OS Capital 400,000.00
Additional paid-in capital 500,000.00
Retained earnings 502,000.00
Total Shareholder's Equity 1,402,000.00
Total Liabilities and Shareholders' Equity 1,962,000.00

P Company issued 16,000 shares of its P10 par value common stock for 80% of the outstanding shares of S C
P50,000 professional fees to accomplish the acquisition.

Price Paid
Noncontrolling interest
Total
Less: Fair value of interest acquired (100%)
Gain on Bargain Purchase

# Classification: Confidential
ACQUIRER'S BOOKS
Investment in S Company 800,000.00
OS Capital 160,000.00
APIC 640,000.00

Retained earnings 50,000.00

Cash 50,000.00

Fair Value Parent (80%)

Book Value 370,000.00 296,000.00
Changes BV to FV 250,000.00 200,000.00
Gain on Bargain Purchase (SQUEEZE) 380,000.00 304,000.00
FV of Subsidiary 1,000,000.00 800,000.00

P Company and S Company

Consolidation Working Paper
December 1, 2019

P Company
Assets
Cash 168,000.00
Accounts Receivable 144,000.00
Inventory 160,000.00
Land 200,000.00
Building, net 840,000.00
Equipment, net 400,000.00
Investment in S 800,000.00
Goodwill -
Total Assets 2,712,000.00

Liabilities and Shareholders' Equity

Liabilities
Accounts payable 160,000.00
Bonds payable 400,000.00
Shareholders' equity
OS Capital 560,000.00
Additional paid-in capital 1,140,000.00
Retained earnings 452,000.00
NCI
Total Liabilities and Shareholders' Equity 2,712,000.00

# Classification: Confidential
ELIMINATING ENTRIES
OS Capital - S Company 20,000.00
Additional paid-in capital - S Company 180,000.00
Retained earnings - S Company 170,000.00
Investment in S
Noncontrolling interest

Inventory 10,000.00
Land 50,000.00
Building, net 200,000.00
Equipment, net 40,000.00
Goodwill 330,000.00
Investment in S
Noncontrolling interest

P Company and Subsidiary

Consolidated Statement of Financial Position
December 1, 2019

Assets
Cash
Accounts Receivable
Inventory
Total Current Assets

Land
Building, net
Equipment, net
Goodwill
Total Non-current Assets
TOTAL ASSETS

Liabilities and Shareholders' Equity

Liabilities
Accounts payable
Bonds payable
Total Liabilities

Shareholders' equity
OS Capital
Additional paid-in capital
Retained earnings
Non-controlling interest
Total Shareholders' Equity

# Classification: Confidential
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

# Classification: Confidential
ecemer 1, 2019:

S Company
Book Value Fair Value
-
40,000.00 40,000.00
100,000.00 110,000.00
80,000.00 130,000.00
300,000.00 500,000.00
80,000.00 120,000.00
50,000.00 -
650,000.00 900,000.00

80,000.00 80,000.00
200,000.00 200,000.00
280,000.00 280,000.00

20,000.00
180,000.00
170,000.00
370,000.00
650,000.00

tstanding shares of S Company. The fair value of P Company's stock is P50 and the fair value of the NCI is assessed to be P20

800,000.00
200,000.00
1,000,000.00
620,000.00
380,000.00

# Classification: Confidential
 Almira Diosa De Castro: (STUDY GUIDE)
Subsidiary (20%) This was my computation table used during my board exams.
74,000.00
BV and Changes from BV to FV should always be separated for
50,000.00 elimintaing entries purposes.
76,000.00
FV of Subsidiary for NCI should not be less than the book value AT ALL
200,000.00
TIMES

Share on Goodwill is NEVER multiplied on 80% of interest.

Eliminating entries
S Company Debit Credit Consolidated

- 168,000.00
40,000.00 184,000.00
100,000.00 10,000.00 270,000.00
80,000.00 50,000.00 330,000.00
300,000.00 200,000.00 1,340,000.00
80,000.00 40,000.00 520,000.00
800,000.00 -
50,000.00 330,000.00 380,000.00
650,000.00 3,192,000.00

80,000.00 240,000.00
200,000.00 600,000.00
-
20,000.00 20,000.00 560,000.00
180,000.00 180,000.00 1,140,000.00
170,000.00 170,000.00 452,000.00
200,000.00 200,000.00
650,000.00 3,192,000.00

# Classification: Confidential
 296,000.00
74,000.00

504,000.00
126,000.00

168,000.00
184,000.00
270,000.00
622,000.00

330,000.00
1,340,000.00
520,000.00
380,000.00
2,570,000.00
3,192,000.00

240,000.00
600,000.00
840,000.00

560,000.00
1,140,000.00
452,000.00
200,000.00
2,352,000.00

# Classification: Confidential
3,192,000.00

# Classification: Confidential
alue of the NCI is assessed to be P200,000. P Company also pays

# Classification: Confidential
 my board exams.

ys be separated for

than the book value AT ALL

0% of interest.

# Classification: Confidential
# Classification: Confidential
# Classification: Confidential
Consolidated Statement of Financial Position - Date of Acquisition
STEP ACQUISITION

P Inc. made the following purchses of equity shares in S Inc.:

Number of shares Cost

January 1, 2015 10,000,000.00 15,000,000.00
January 1, 2016 15,000,000.00 40,000,000.00
January 1, 2017 30,000,000.00 75,000,000.00
55,000,000.00 130,000,000.00

The summarized statements of financial position (other format) of the two companies for the year ended Dec

P Inc.
Current assets 70,000,000.00
Property, Plant, and Equipment 200,000,000.00
Investment in S 130,000,000.00
400,000,000.00

Current liabilities 40,000,000.00

Non-curent liabilities 40,000,000.00
Ordinary shares of P1 each 200,000,000.00
Retained earnings 120,000,000.00
400,000,000.00

On January 1, 2017, P Inc. assumed control of S Inc. It is the policy of the group to measure NCI at acquisitio
On January 1, 2017, the fair value of the common shares of S Inc. was P2.50 per share

Goodwill on Combination under PFRS 3 Revised

Total Parent (55%)

Book Value of Net Assets
OS Capital 100,000,000.00 55,000,000.00
RE, 1/1/17 50,000,000.00 27,500,000.00
150,000,000.00 82,500,000.00
GOODWILL (SQUEEZE) 100,000,000.00 55,000,000.00
FV of S Inc. as a whole 250,000,000.00 137,500,000.00

Group's retained earnings for December 31, 2017

Parent's retained earnings

Gain on remeasurement of previously held shares
(10,000 x P2.50) - P15,000,000 10,000,000.00
(15,000 x P2.50) - P40,000,000 (2,500,000.00)

# Classification: Confidential
Share of post-acquisition profits of S Inc.
55% x (80,000-50,000)
Group retained earnings

Non-controlling interest for December 31, 2017

NCI at acquisiton date fair value

NCI's share on post-acquistition profits (45% x (80,000-50,000)
NCI, Dec. 31, 2017

P Group
Consolidated Statement of Financial Position
December 31, 2017

December 31, 2017

Current assets 220,000,000.00
Property, Plant, and Equipment 300,000,000.00
Goodwill 100,000,000.00
TOTAL ASSETS 620,000,000.00

Current liabilities 90,000,000.00

Non-curent liabilities 60,000,000.00
Ordinary shares of P1 each 200,000,000.00
Retained earnings 144,000,000.00
Non-Controlling Interest 126,000,000.00
TOTAL LIABILITIES AND SHE 620,000,000.00

# Classification: Confidential
 Balances in Retained
earnings
20,000,000.00
30,000,000.00
50,000,000.00

s for the year ended December 31, 2017 are as follows:

S Inc.
150,000,000.00
100,000,000.00
-
250,000,000.00

50,000,000.00
20,000,000.00
100,000,000.00
80,000,000.00
250,000,000.00

measure NCI at acquisition date fair value.

NCI (45%)

45,000,000.00
22,500,000.00
67,500,000.00
45,000,000.00
112,500,000.00

120,000,000.00

7,500,000.00

# Classification: Confidential
 16,500,000.00
144,000,000.00

112,500,000.00
13,500,000.00
126,000,000.00

# Classification: Confidential
Consolidated Statement of Financial Position - Date of Acquisition
PUSH-DOWN ACCOUNTING

NB: The example is the same with Case 4. Only the entries are different.

Below are the Statements of Financial Position of P Company and S Company as of Decemer 1, 2019:

P Company and S Company

Statements of Financial Position
December 1, 2019
P Company
Assets
Cash 218,000.00
Accounts Receivable 144,000.00
Inventory 160,000.00
Land 200,000.00
Building, net 840,000.00
Equipment, net 400,000.00
Total Assets 1,962,000.00

Liabilities and Shareholders' Equity

Liabilities
Accounts payable 160,000.00
Bonds payable 400,000.00
Total liabilities 560,000.00

Shareholders' equity
OS Capital 400,000.00
Additional paid-in capital 500,000.00
Retained earnings 502,000.00
Total Shareholder's Equity 1,402,000.00
Total Liabilities and Shareholders' Equity 1,962,000.00

P Company issued 16,000 shares of its P10 par value common stock for 80% of the outstanding shares of S C
Company also pays P50,000 professional fees to accomplish the acquisition.

Price Paid
Noncontrolling interest
Total
Less: Fair value of interest acquired (100%)
Goodwill

# Classification: Confidential
ACQUIRER'S BOOKS
Investment in S Company 800,000.00
OS Capital 160,000.00
APIC 640,000.00

Retained earnings 50,000.00

Cash 50,000.00

Fair Value Parent (80%)

Book Value 320,000.00 256,000.00
Changes BV to FV 300,000.00 240,000.00
Goodwill (SQUEEZE) 350,000.00 304,000.00
FV of Subsidiary 970,000.00 800,000.00

P Company and S Company

Consolidation Working Paper
December 1, 2019

P Company
Assets
Cash 168,000.00
Accounts Receivable 144,000.00
Inventory 160,000.00
Land 200,000.00
Building, net 840,000.00
Equipment, net 400,000.00
Investment in S 800,000.00
Goodwill
Total Assets 2,712,000.00

Liabilities and Shareholders' Equity

Liabilities
Accounts payable 160,000.00
Bonds payable 400,000.00
Shareholders' equity
OS Capital 560,000.00
Additional paid-in capital 1,140,000.00
Retained earnings 452,000.00
NCI
Total Liabilities and Shareholders' Equity 2,712,000.00

# Classification: Confidential
JOURNAL ENTRY (PUSH-DOWN IN SUBSIDIARY'S BOOKS)
Inventory 10,000.00
Land 50,000.00
Building, net 200,000.00
Equipment, net 40,000.00
Goodwill 350,000.00
Retained earnings - S Company 120,000.00
Additional paid-in capital - S Company

ELIMINATING ENTRIES
OS Capital - S Company 20,000.00
Additional paid-in capital - S Company 950,000.00
Investment in S
Noncontrolling interest

P Company and Subsidiary

Consolidated Statement of Financial Position
December 1, 2019

Assets
Cash
Accounts Receivable
Inventory
Total Current Assets

Land
Building, net
Equipment, net
Goodwill
Total Non-current Assets
TOTAL ASSETS

Liabilities and Shareholders' Equity

Liabilities
Accounts payable
Bonds payable
Total Liabilities

Shareholders' equity
OS Capital
Additional paid-in capital
Retained earnings
Non-controlling interest
Total Shareholders' Equity

# Classification: Confidential
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

# Classification: Confidential
 ny as of Decemer 1, 2019:

S Company
Book Value Fair Value
-
40,000.00 40,000.00
100,000.00 110,000.00
80,000.00 130,000.00
300,000.00 500,000.00
80,000.00 120,000.00
600,000.00 900,000.00

80,000.00 80,000.00
200,000.00 200,000.00
280,000.00 280,000.00

20,000.00
180,000.00
120,000.00
320,000.00
600,000.00

% of the outstanding shares of S Company. The fair value of P Company's stock is P50 and the fair value od the 20% NCI is ass

800,000.00
170,000.00
970,000.00
620,000.00
350,000.00

# Classification: Confidential
Subsidiary (20%)
64,000.00
60,000.00
46,000.00
170,000.00

Eliminating entries
S Company Debit Credit Consolidated

- 168,000.00
40,000.00 184,000.00
100,000.00 10,000.00 270,000.00
80,000.00 50,000.00 330,000.00
300,000.00 200,000.00 1,340,000.00
80,000.00 40,000.00 520,000.00
800,000.00 -
350,000.00 350,000.00
600,000.00 3,162,000.00

80,000.00 240,000.00
200,000.00 600,000.00
-
20,000.00 20,000.00 560,000.00
180,000.00 950,000.00 770,000.00 1,140,000.00
120,000.00 120,000.00 452,000.00
170,000.00 170,000.00
600,000.00 3,162,000.00

# Classification: Confidential
 770,000.00

800,000.00
170,000.00

168,000.00
184,000.00
270,000.00
622,000.00

330,000.00
1,340,000.00
520,000.00
350,000.00
2,540,000.00
3,162,000.00

240,000.00
600,000.00
840,000.00

560,000.00
1,140,000.00
452,000.00
170,000.00
2,322,000.00

# Classification: Confidential
3,162,000.00

# Classification: Confidential
od the 20% NCI is assessed to be P170,000. P

# Classification: Confidential
# Classification: Confidential
# Classification: Confidential
# Classification: Confidential
 Consolidated Statement of Financial Position - Date of Acquisition
REVERSE ACQUISITION

Public Company and Private Company

Statements of Financial Position
Sseptember 30, 2017
Public Company
ASSETS
Current Assets 500,000.00
Non-current assets 1,300,000.00
TOTAL ASSETS 1,800,000.00

LIABILITIES AND EQUITY

Current liabilities 300,000.00
Non-current liabilities 400,000.00
Ordinary share capital (100sh 1000par),(60sh 1000par) 100,000.00
Additional paid in capital 200,000.00
Retained earnings 800,000.00
TOTAL LIABILITIES AND EQUITY 1,800,000.00

Additional information:
On September 30, 2017 Public Company issues 2.5 shares in exchange for each ordinary share of Private
a
Company issues 150 share in exchange for all 60 share of Private.
b The fair value of each share of Private at Sept 30, 2017 is P40,000. The quoted market price of Public's s
The fair values of Public's identifiable asets and liabilities on Sept 30, 2017 are the same as their book va
c
P1,500,000.

FV of consideration transferred
Less: FV of Public's identifiable net assets
Goodwill

Public Company and Subsidiary Private Company

Statement of Financial Position
Sseptember 30, 2017

ASSETS
Current Assets 1,200,000.00
Non-current assets 4,500,000.00
Goodwill 300,000.00
TOTAL ASSETS 6,000,000.00

LIABILITIES AND EQUITY

Current liabilities 900,000.00
Non-current liabilities 1,500,000.00
Ordinary share capital (150sh 1000par) 150,000.00
Additional paid in capital* 450,000.00

# Classification: Confidential
Retained earnings 1,400,000.00
Non-controlling interest** 1,600,000.00
TOTAL LIABILITIES AND EQUITY 6,000,000.00

*APIC is computed as follows

Total PIC of Private (P60,000+P540,000) 600,000.00
Net shares issued (150 shares x P1,000 par) (150,000.00)
APIC 450,000.00

**NCI represents the remaining shares of Public

OS Cap (100k+150k)
APIC [200k+(1,600kx60%)-150k)
Retained earnings
Controlling interest (1,100k x60%)
Adj. of non-current assets and goodwill [(200k+300k)x40%]
TOTAL NCI

# Classification: Confidential
 Almira Diosa De Castro:
legal parent, but acquiree for
accounting
Almira Diosa De Castro:
Private Company legal subsidiary, but acquirer
for accounting
700,000.00
3,000,000.00
3,700,000.00

600,000.00
1,100,000.00
60,000.00
540,000.00
1,400,000.00
3,700,000.00

or each ordinary share of Private Company. All of Private Company's shareholders exchange their shares. Therefore, Public

quoted market price of Public's shares at the date is P16,000 per share.
7 are the same as their book values, except that the fair value of Public's non-current assets at September 30, 2017 is

1,600,000.00
1,300,000.00
300,000.00

# Classification: Confidential
 250,000.00
1,010,000.00
800,000.00
(660,000.00)
200,000.00
1,600,000.00

# Classification: Confidential
eir shares. Therefore, Public

September 30, 2017 is

# Classification: Confidential
# Classification: Confidential