Solving for Cost of Investment (COI):

Ordinary Shares Issued 10,000.00

Market Value per share 20.00
Total Market Value of shares issued 200,000.00
Par Value of shares (10,000sh x P10) 100,000.00
Share Premium on issued shares 100,000.00

Face Amount of Bonds 500,000.00

Trading Value of Bonds 110.00
Market Value of Bonds 550,000.00

Bonds Premium 50,000.00

Total Market Value of shares issued 200,000.00

Market Value of Bonds 550,000.00
COI (Total Consideration for Acquisition) 750,000.00

Solving for Fair Value of Net Assets (FVNA):

ENTITY B (Subsidiary) Book Value
Current Assets 500,000.00
Noncurrent Assets 1,000,000.00
Current Liabilities (400,000.00)
Noncurrent Liabilities (500,000.00)
Net Assets 600,000.00

Solving for Goodwill (Gain on Bargain Purchase)

COI 750,000.00
FVNA (700,000.00)
a Goodwill (Gain on Bargain Purchase) 50,000.00
 Acquisition-Related Costs:
Share Issuance Cost
Bonds Issue Cost
Other Acquisition-Related Cost
Indirect Costs

Share Premium from Acquisition

Acquisition-related cost (Attributable to share issuance)
Adjusted Balance of Share Premium

Bonds Premium from Acquisition

Acquisition-related cost (Attributable to bonds issuance)
Adjusted Balance of Share Premium

b Total Expenses
Fair Value
500,000.00 Total Assets after the Combination:
1,300,000.00 Entity A's Current Assets (Book Value)
(600,000.00) Entity A's Noncurrent Assets (Book Value)
(500,000.00) Entity B's Current Assets (Fair Value)
700,000.00 Entity B's Noncurrent Assets (Fair Value)
Goodwill
Cash paid for acquisition-related costs
c Total Assets after the Combination

Total Liabilities after the Combination:

Entity A's Current Liabilities (Book Value)
Entity A's Noncurrent Liabilities (Book Value)
Entity B's Current Liabilities (Fair Value)
Entity B's Noncurrent Liabilities (Fair Value)
Face Amount of Bonds
Adjusted Balance of Share Premium
d Total Liabilities after the Combination
 Journal Entries:
10,000.00 Share Premium
20,000.00 Bonds Premium ENTITY A (Acquirer/Parent)
40,000.00 Expense Acquisition:
30,000.00 Expense Current Assets (Entity B @ FV)
100,000.00 Noncurrent Assets (Entity B @ FV)
Goodwill
100,000.00 Current Liabilities (Entity B @ FV)
(10,000.00) Noncurrent Liabilities (Entity B @ FV)
90,000.00 Ordinary Share Capital
Share Premium
50,000.00 Bonds Payable
(20,000.00) Bonds Premium
30,000.00
Acquisition-Related Costs:
Share Premium (To record share issuance cost)
Bonds Premium (To record bonds issuance cost)
70,000.00 Expenses
Cash

1,000,000.00 ENTITY B (Acquiree/Subsidiary)

2,000,000.00 To close books:
500,000.00 Current Liabilities
1,300,000.00 Noncurrent Liabilities
50,000.00 Ordinary Shares
(100,000.00) Share Premium
4,750,000.00 Retained Earnings
Current Assets
Noncurrent Assets
200,000.00
300,000.00
600,000.00
500,000.00
500,000.00
30,000.00
2,130,000.00
 500,000.00
1,300,000.00
50,000.00
600,000.00
500,000.00
100,000.00
100,000.00
500,000.00
50,000.00

10,000.00
20,000.00
70,000.00
100,000.00

400,000.00
500,000.00
200,000.00
300,000.00
100,000.00
500,000.00
1,000,000.00
 Total Assets (BV) 2,700,000.00
Total Liabilities (BV) (525,000.00)
BVNA 2,175,000.00
FV Adjustment (Land) 780,000.00
FV Adjustment (Building) 480,000.00
FVNA 3,435,000.00

COI 3,000,000.00

a Total Parent
100% 80%
COI 3,687,000.00 3,000,000.00
FVNA 3,435,000.00 2,748,000.00
GW (Gain on BP) 252,000.00 252,000.00

Assumed NCI:
COI - Parent 3,000,000.00
Less: Control Premium (852,000.00)
Basis for NCI Assumed FV 2,148,000.00
Divided by: Ownership of Parent 80%
COI - Total 2,685,000.00
Multiply by: Ownership of NCI 20%
Assumed FV of NCI 537,000.00

*we will not use this FV because it is less than the FVNA - NCI
** we will use the proportionate NCI (equal to FVNA - NCI)

b Total Parent
100% 80%
COI 3,874,500.00 3,138,000.00
FVNA 3,435,000.00 2,748,000.00
GW (Gain on BP) 439,500.00 390,000.00
NCI
20%
687,000.00
687,000.00
-

NCI
20%
736,500.00
687,000.00
49,500.00
Acquired shares 80,000.00
Divided by: Total Outstanding Shares 100,000.00
% of Ownership 80%

BVNA 1,600,000.00
Overvalued Asset (60,000.00)
Undervalued Liability (40,000.00)
FVNA 1,500,000.00

Total Parent
100% 80%
COI 1,300,000.00 1,000,000.00
FVNA 1,500,000.00 1,200,000.00
GW (Gain on BP) (200,000.00) (200,000.00)
b

* we will not use this FV because it is less than the FVNA - NCI
** we will use the proportionate NCI (equal to FVNA - NCI)
NCI
20%
300,000.00 a*
300,000.00
-
 Wonder Assets 900,000.00
Wonder Liabilities (90,000.00)
BVNA 810,000.00
Adjustment (918k - 630k) 288,000.00
FVNA 1,098,000.00

a Total Parent
100% 80%
COI 1,039,600.00 820,000.00
FVNA 1,098,000.00 878,400.00
GW (Gain on BP) (58,400.00)

Consolidated SHE
OSC - Arden 900,000.00
SP - Arden 2,700,000.00
RE - Arden 4,860,000.00
Gain on BP 58,400.00
a Consolidated SHE 8,518,400.00

b Total Parent
100% 90%
COI 1,620,000.00 1,458,000.00
FVNA 1,098,000.00 988,200.00
GW (Gain on BP) 522,000.00

Consolidated Assets
Arden Assets (BV) 9,000,000.00
Wonder Assets (FV) 1,188,000.00
Arden Liabilities (BV) (540,000.00)
Wonder Liabilities (FV) (90,000.00)
Cash consideration paid (1,458,000.00)
Goodwill 522,000.00
b Consolidated Assets 8,622,000.00
NCI
20%
219,600.00
219,600.00

NCI
10%
162,000.00
109,800.00