PROBLEM 3: FOR CLASSROOM DISCUSSION

1. D
2. D

3. Solution:
Consideration transferred 1,800,000
Non-controlling interest in the acquiree -
Previously held equity interest in the acquiree -
Total 1,800,000
Fair value of net identifiable assets acquired
(2.37M – 20K goodwill – 700K liabilities) (1,650,000)
Goodwill 150,000

4. Solution:
Consideration transferred 2,000,000
NCI [(4M –1.6M) x 25%] 600,000
Previously held equity interest in the acquiree -
Total 2,600,000
Fair value of net identifiable assets acquired (4M –1.6M) (2,400,000)
Goodwill 200,000

5. Solution:
Consideration transferred 2,000,000
NCI 540,000
Previously held equity interest in the acquiree -
Total 2,540,000
Fair value of net identifiable assets acquired (4M –1.6M) (2,400,000)
Goodwill 140,000

6. Solution:
Consideration transferred (18,000 sh. x ₱100) 1,800,000
Non-controlling interest in the acquire -
Previously held equity interest in the acquiree -
Total 1,800,000
Fair value of net identifiable assets acquired (3.8M –1.9M) (1,900,000)
Gain on bargain purchase (100,000)

The ₱36,000 stock issuance costs are deducted from share premium. The ₱60,000 finder’s fees are
expensed. The ₱280,000 liquidation costs are post-combination expenses. All of these do not affect
the computation of goodwill.

7. Solution:
Consideration transferred 2,800,000
Non-controlling interest in the acquire -
Previously held equity interest in the acquiree -
Total 2,800,000
 Fair value of net identifiable assets acquired
(4M + 100K patent + 160K R&D + 40K intangible asset on
operating lease w/ favorable terms –1.6M) (2,700,000)
Goodwill 100,000

8. Solution:
Consideration transferred 1,800,000
NCI (2.2M ‘see below’ x 25%) 550,000
Previously held equity interest in the acquiree -
Total 2,350,000
Fair value of net identifiable assets acquired
(4M – 1.6M – 200K contingent liability) (2,200,000)
Goodwill 150,000

9. Solution:
Consideration transferred 4,000,000
Non-controlling interest in the acquiree -
Previously held equity interest in the acquiree -
Total 4,000,000
Fair value of net identifiable assets acquired
(6.1M + 60K DTA –2.3M – 90K DTL) (3,770,000)
Goodwill 230,000

Carrying amt. - fin'l. reptg. Tax base TTD (DTD)

Assets 6,100,000 5,800,000 300,000
Liabilities 2,300,000 2,100,000 (200,000)

Taxable temporary difference 300,000

Multiply by: Tax rate 30%
Deferred tax liability 90,000

Deductible temporary difference 200,000

Multiply by: Tax rate 30%
Deferred tax asset 60,000

10. Solution:
Consideration transferred (2.8M – 280K dividends on) 2,520,000
Non-controlling interest in the acquiree -
Previously held equity interest in the acquiree -
Total 2,520,000
Fair value of net identifiable assets acquired
(4M – 1.6M) (2,400,000)
Goodwill 120,000