Book Value 400000

Direct cost 75000

Acquisition cost 475000
FV of net assets acquired 450000
Goodwill 25000

Consideration Transferred 500000

Net Assets acquired 600000
Loss on bargain purchase -100000

Consideration transferred P80,000

Fair market value of net as 90,000
Gain on Bargain Purchase/ P10,000

Consideration transferredP2,650,000
FMV of net assets
(P1,890,000 + P2,900,00 3,650,000
Credit to profit and loss 1,000,000

1– B 1 B Consideration transferred
Fair market value of net assets acquired
Gain on Bargain Purchase/Negative Goodwill

1–C 1 C Consideration transferred

FMV of net assets
(P1,890,000 + P2,900,000 – P1,140,000)
Credit to profit and loss

1– D 1 C Consideration transferred
FMV of net assets acquired
(P3,239,600 – 171,600)
Goodwill

1–E 1 C Retained Earnings of the surviving company remains the same since no part of

1– F 1 D Total assets of Pacino before the combination

Assets acquired from Lucky
Goodwill recorded upon combination
Total assets after the combination

Consideration transferred (200,000 sh @ P11)

Net assets acquired (P1,733,250 – P383,250)
Goodwill

1-G 1 C Customers Lists

Research and Development
Operating Lease
Goodwill

1-H 1 B

1–I 1 A The retained earnings of the acquiring company

 2 D APIC in shares issued to the 3 acquired co. (P10
APIC of Co. U

Amount paid plus the contingent

consideration that is recognized because the
1– J 1 B contingent consideration is probable and can
be reasonably estimated at the date of
acquisition.

1- K 1. A P285 – P200 = P85 million

1- L 1. B P200 – P145 = P55 million. The P160 million fair value is beyond the one year measurement period.

1- M 1. D P2,200,000 – (P2,000,000 x 80%) = P600,000

1- N 1. D (1) P100 + (P85 x 20%)= P117 – P85 = P32 million

(2) (P100 – P24)/80% x 20% = P19 + P100 – P85 = P34 million

1- O 1. D P900,000 – (P1,200,000 x 60%) = P180,000

Gain on bargain purchase is reported in the income statement

1- P 1. C 50,000 @ P18= P900,000

1- Q 1. C P90 – P82 = P8 gain on bargain purchase recognized in profit and loss

1 – R. 1 D Average earnings
Normal earnings (P300,000 x 8%)
Excess earnings
Goodwill (P26,000/10%)

2 D Average earnings
Normal earnings (P400,000 x 8%)
Excess earnings
Goodwill (P48,000/10%)
Net asset contribution
Total contribution

1–S 1 D JPE = [P25,000 – (P250,000 x 6%)]/10%

FPJ = [P14,000 – (P150,000 x 8%)]/10%
Total goodwill

1–T 1 A Average earnings

Normal earnings (P1,200,000 x 10%)
Excess earnings
Capitalization rate
Goodwill

2 A Consideration transferred
FMV of net assets acquired
(P520,000 + P1,480,000 – P800,000)
Goodwill

1–U 1 C
Expected annual earnings
Capitalization rate
Total contribution
Asset contribution equal to
preference shares
 Goodwill equal to ord. sh
Par value of ord. shares
Ordinary shares dist.

1–V 1 B (P3,800,000 - P2,500,000)/P100

2 D Excess earnings = P481,000 – (P1,300,000 x 15
Goodwill equal to par value of ordinary share
to be issued = P286,000/20%
Premium on ordinary share = P1,430,000 x 50

1– W 1 C
Earnings contribution
Normal earnings (6%)
Excess earnings
Capitalization rate
Goodwill
Asset contribution

Total contribution
Share capital dist.
290/1,200 x 1,000
360/1,200 x 1,000

550/1,200 x 1,000

1– X 1 A
Estimated earnings
Normal earnings (6%)
Excess earnings
Capitalization rate
Goodwill
Asset contribution

Total contribution
Share capital dist %
458,750/1,800,000
900,000/1,800,000
431,250/1,800,000

1–Y 1 B Ordinary Share Capital

Par value per share
Number of shares outstanding
4,000 sh / 5,000 sh

1–Z 1 D FMV of net assets equal of MV of share capital

MV per share
Number of shares to be issued
 P80,000
90,000
P10,000

P2,650,000

3,650,000
P 1,000,000

P3,068,000

3,068,000
Zero

company remains the same since no part of the acquired company’s Retained Earnings is recorded upon combination.

P1,097,500
1,733,250
850,000
P3,680,750

P2,200,000
1,350,000
P 850,000

P 90,000
220,000
25,000
P335,000

ing company
 P200,000
15,000
P215,000

ond the one year measurement period.

P 50,000
24,000
P 26,000
P260,000

P 80,000
32,000
P 48,000
P480,000
400,000
P880,000

)]/10% P 100,000
)]/10% 50,000
P 150,000

P300,000
%) 120,000
P180,000
÷25%
P720,000

P1,500,000

000) 1,200,000
P 300,000

Abner Bertha Charlie

P 36,000 P 80,000 P 96,000
÷ 8% ÷ 8% ÷ 8%
P450,000 P1,000,000 P1,200,000

400,000 800,000 800,000

P 50,000 P 200,000 P 400,000
÷ P10 ÷ P10 ÷ P10
5,000 sh 20,000 sh 40,000 sh

13,000 sh
P 286,000

P1,430,000
P 715,000

Frannie Giselle Hazel Total

P 30,000 P 30,000 P 40,000 P 100,000
12,000 18,000 30,000 60,000
P 18,000 P 12,000 P 10,000 P 40,000
÷ 20%
÷ 20% ÷ 20% ÷ 20%
P 90,000 P 60,000 P 50,000 P 200,000
200,000 300,000 500,000 1,000,000
P290,000 P360,000 P550,000 P1,200,000

242 sh
300 sh
458 sh 1,000 sh

Polar Quickie Robot Total

P 41,250 P 75,000 P 33,750 P 150,000
22,500 45,000 22,500 90,000
P 18,750 P 30,000 P 11,250 P 60,000
÷ 20%
÷ 20% ÷ 20% ÷ 20%
P 93,750 P150,000 P 56,250 P 300,000
375,000 750,000 375,000 1,500,000
P458,750 P900,000 P431,250 P1,800,000

26%
50%
24%

P250,000
÷ P50
5,000
0.8

P2,000,000
÷P100
20,000 sh
 No.1 No. 2
Consideration transferred P50,000,000 P50,000,000
Non-controlling interest
P42,500,000 x 20% 8,500,000
P50,000,000 – P12,000,000/80% x 20% 9500000
Total 58,500,000 59500000
Fair market value of net assets acquired 42,500,000 42,500,000
Goodwill P16,000,000 P17,000,000
P58,500,000 P59,500,000