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    Activity Chapter 2

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    Randelle James Fiesta
    Conjunction Co. issued 10,000 shares to acquire ABC. The par value of each share was 20 currency units. The acquisition-date fair value of UNION's net identifiable assets was 1,400,000 currency units. OBDURATE acquired additional shares in STUBBORN, Inc. for 1,600,000 currency units. Its previously held shares were worth 360,000 currency units. The fair value of STUBBORN's net identifiable assets was 2,000,000 currency units. The goodwill from the acquisition was 160,000 currency units.

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    Activity Chapter 2

    Uploaded by

    Randelle James Fiesta
    40 views2 pages
    Conjunction Co. issued 10,000 shares to acquire ABC. The par value of each share was 20 currency units. The acquisition-date fair value of UNION's net identifiable assets was 1,400,000 currency units. OBDURATE acquired additional shares in STUBBORN, Inc. for 1,600,000 currency units. Its previously held shares were worth 360,000 currency units. The fair value of STUBBORN's net identifiable assets was 2,000,000 currency units. The goodwill from the acquisition was 160,000 currency units.

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    ACTIVITY CHAPTER 2

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    Conjunction Co. issued 10,000 shares to acquire ABC. The par value of each share was 20 currency units. The acquisition-date fair value of UNION's net identifiable assets was 1,400,000 currency units. OBDURATE acquired additional shares in STUBBORN, Inc. for 1,600,000 currency units. Its previously held shares were worth 360,000 currency units. The fair value of STUBBORN's net identifiable assets was 2,000,000 currency units. The goodwill from the acquisition was 160,000 currency units.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    40 views2 pages

    Activity Chapter 2

    Uploaded by

    Randelle James Fiesta
    Conjunction Co. issued 10,000 shares to acquire ABC. The par value of each share was 20 currency units. The acquisition-date fair value of UNION's net identifiable assets was 1,400,000 currency units. OBDURATE acquired additional shares in STUBBORN, Inc. for 1,600,000 currency units. Its previously held shares were worth 360,000 currency units. The fair value of STUBBORN's net identifiable assets was 2,000,000 currency units. The goodwill from the acquisition was 160,000 currency units.

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    © All Rights Reserved
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    of 2

    ACTIVITY CHAPTER 2

    1.
    a.
    Number of shares issued by CONJUNCTION Co. in the business
    combination.
    Ans.
    Solution:
    Conjunction Co. Combined entity Increase
    Share capital 1,200,000 1,400,000 200,000
    Share premium 600,000 2,400,000 1,800,000
    Total 1,800,000 3,800,000 2,000,000

    Fair value of shares transferred 2,000,000


    Divide by: ABC’s fair value per share 200
    Number of shares issued 10,000

    b.
    Par value per share of the shares issued.
    Ans.
    Solution:
    Increase in share capital account 200,000
    Divide by: Number of shares issued 10,000
    Par value per share 20

    c.
    Acquisition-date fair value of the net identifiable assets of UNION.
    Ans.
    Solution:
    Consideration transferred 2,000,000
    Non-controlling interest in the acquiree -
    Previously held equity interest in the acquiree -
    Total 2,000,000
    Fair value of net identifiable assets acquired (1,400,000)
    Goodwill (given information) 600,000
    2. On January 1, 20x1, OBDURATE Co. acquired 30% ownership interest in
    STUBBORN, Inc. for ₱200,000. Because the investment gave OBDURATE
    significant influence over STUBBORN, the investment was accounted for under the
    equity method in accordance with PAS 28.

    From 20x1 to the end of 20x3, OBDURATE recognized ₱100,000 net share in the
    profits of the associate and ₱20,000 share in dividends. Therefore, the carrying
    amount of the investment in associate account on January 1, 20x3, is ₱280,000.

    On January 1, 20x4, OBDURATE acquired additional 60% ownership interest in


    STUBBORN, Inc. for ₱1,600,000. As of this date, OBDURATE has identified the
    following:
    a. The previously held 30% interest has a fair value of ₱360,000.
    b. STUBBORN’s net identifiable assets have a fair value of ₱2,000,000.
    c. OBDURATE elected to measure non-controlling interests at the non-controlling
    interest’s proportionate share of STUBBORN’s identifiable net assets.

    Requirement: Compute for the goodwill.


    Ans.
    Solution:
    Consideration transferred 1,600,000
    Non-controlling interest in the acquiree 200,000
    Previously held equity interest in the acquiree 360,000
    Total 2,160,000
    Fair value of net identifiable assets acquired (2,000,000)
    Goodwill 160,000

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