MEC 57 – PRACTICE SET 1 FOR SUBMISSION D.3.

Assuming LISAYAH acquired 90% of the outstanding

ordinary share of JISOYAHH for P243,000 and noncontrolling
Instructions: interest is measured at fair value , compute for total consolidated
 Use a clean sheet of paper, write your solutions and assets on the date of acquisition.
box your final answers.
 Submit at the faculty on Tuesday, August 22,
10.30am. E. April 30, 2023, Papa Corp. issues 30,000 shares of its no-par
value common stock having a current fair value of P20 a share
A. On the day of acquisition of S Co. had the following assets for 8,000 shares of Siya Inc,’s P10 par common stock. Out of
and liabilities: pocket costs of the business combination, paid by SIYA on
behalf of Pop on April 30 were as follows:

Professional fees relation to business combination P40,000

SEC registration costs P30,000

Separate balance sheets of the two companies on April 30, 2023

P Company paid P350,000 for 90% of the common stock of S prior to the combination were as follows:
Co. Compute for the goodwill to be reported on the
consolidated balance sheet as of date of acquisition.

B. The PLINK Co. acquired a 70% interest in the SLACK

Company for P4,970,000 when the fair value of SLACK’s
identifiable assets and liabilities was P4,200,000. PLINK
acquired 65% interest in the STARK Co. for P1,050,000 when
the fair value of STARK’s identifiable assets and liabilities was
P2,240,000. PLINK measures noncontrolling interests at the
relevant share of the identifiable net assts at the acquisition
date. Neither SLACK nor STARK had any contingent liabilities
at the acquisition date and the above fair values were the same
as the carrying amounts in their financial statements. Annual
impairment reviews have not resulted in any impairment losses
being recognized.
Current fair value of SIYA’s identifiable net assets were the same
Compute for the goodwill/ gain on bargain purchase at the date as their book values, except for the following:
of acquisition.
Inventories P440,000
Plant assets – net 780,000
C. BLACKPINK Company acquires 25% of YG’s ordinary stock Long-term debt 620,000
for P190,000 cash and carries the investment using the cost
method. After 3 months, BLACKPINK purchases another 60%
of YG’s ordinary stock for P540,000. On this date, acquired Prepare a consolidation working paper for consolidated balance
company reports identifiable net assets with carrying value of sheet of Papa Corp and subsidiary on April 30, 2023.
P720,000 and fair value of P920,000. The Liabilities of the Make sure to show the journal entries supporting the working
acquired company has a book value and a fair value of paper.
P280,000. The fair value of the 15% noncontrolling interest is
P125,000.

Compute for the goodwill/ gain on bargain purchase at the date

of acquisition.

D. On January 2, 2023, the statement of financial position of

LISAYAH and JISOOYAH Inc. prior to the combination are:

The fair value of JISOOYAH’s equipment is P153,000.

Assume the following independent cases:

D.1. Assuming LISAYAH acquired 70% of the outstanding

ordinary share of JISOYAHH for P105,000 and noncontrolling
interest is measured at fair value of P61,000, compute for the
goodwill/ gain on acquisition.

D.2. Assuming LISAYAH acquired 80% of the outstanding

ordinary share of JISOYAHH for P136,800 and noncontrolling
interest is measured at proportionate share of JISOOYAH’s
identifiable net assets, compute for the consolidated
stockholders’ equity on the date of acquisition.