Chapter 1: Statutory merger and statutory consolidation

Multiple choice:

#1. Manet Corp c

#2-6 DJ
Consideration transferred:
Cash 5,000,000
Common stock 50000x40 2,000,000
contingent consideration
Present value 1Mx.69444 694,440
Total consideration 7,694,440 #2-b
Fair value of net assets acquired
Current assets 2,100,000
PPE,net 3,000,000
ident. Tangible assets 7,000,000
Intangible assets 290,000
current liab - 1,000,000
long-term debt - 5,800,000
contractual obligation - 280,000 5,310,000
Positive excess-goodwill 2,384,440 #3: b

Intangible assets
advance production technology 170,000
non-competition agreement 70,000
customer contract-long tern 50,000
290,000
DJ Builders Balance
as adjusted fair value after acquisition
Current assets see below 1,400,000 2,100,000 3,500,000
PPE 55,000,000 3,000,000 58,000,000
Identifiable tangible assets 400,000 7,000,000 7,400,000
advance production technology 170,000 170,000
non-competition agreement 70,000 70,000
customer contract 50,000 50,000
Goodwill 2,384,440 2,384,440
71,574,440

Current liabilities 6,500,000 1,000,000 7,500,000

Non-current liabilities
long-term debt 30,000,000 5,800,000 35,800,000
contratual obligation 280,000 280,000
Contingent consideration 694,440 694,440 44,274,440 Q#5-b
Common stock see below 700,000 700,000
additional paid-in capital (see below) 23,300,000 23,300,000
Retained Earnings see below 3,600,000 3,600,000
Accumulated other comp. income 100,000 100,000
Treasury stock - 400,000 - 400,000 27,300,000 Q#6: b
71,574,440

Current assets(DJ)
beg. 7,000,000 1,400,000
5,000,000 cash payment
400,000 exp.
200,000 reg.
7,000,000 7,000,000

Common stock
200,000
500,000 50000x10
700,000
 Additional paid-in capital
end 23,300,000 22,000,000
reg. 200,000 1,500,000 50000x30
23,500,000 23,500,000

Retained earnings
end 3,600,000 4,000,000
exp 400,000
4,000,000 4,000,000

#7-13 Dr. Pepper Snapple Group

Consideration transferred
cash paid to acquired 85,000,000
common stock 100000 shares, P50 par 5,000,000
earnings contingency 2,000,000
total 92,000,000 #7-a
less: fair value of net assets
current assets 800,000
PPE 10,000,000
patents and trademarks 20,000,000
unrecorded assets
Bottler's franchise rights 5,000,000
signed customers contract 1,000,000
internet domain names 3,000,000
customer order backlog 1,500,000
employment contracts 500,000
registered company name 1,000,000
well-publicised internet domain nam 2,000,000
trade dress 1,200,000
proprietary data base of industry da 800,000
trade secrets 400,000
current liabilities - 400,000
long-term liab. - 41,000,000 5,800,000
Goodwill 86,200,000 #8-a

DPSG Turqouise Balance

as adjusted fair value after acquisition
Current assets 7,400,000 800,000 8,200,000
ppe 40,000,000 10,000,000 50,000,000
patents and trademarks 5,000,000 20,000,000 25,000,000
Bottler's franchise rights 5,000,000 5,000,000
signed customers contract 1,000,000 1,000,000
internet domain names 3,000,000 3,000,000
customer order backlog 1,500,000 1,500,000
employment contracts 500,000 500,000
registered company name 1,000,000 1,000,000
well-publicised internet domain name 2,000,000 2,000,000
trade dress 1,200,000 1,200,000
proprietary data base of industry data 800,000 800,000
trade secrets 400,000 400,000
Goodwill 86,200,000 86,200,000
185,800,000 #9:a
Current liabilities 1,000,000 400,000 1,400,000
long-term liabilities 10,000,000 41,000,000 51,000,000
contingent liab 2,000,000 2,000,000 54,400,000 #10-c
common stock 77,250,000 77,250,000 #11-c
APIC 40,550,000 40,550,000 #12-b
Retained earnings 8,800,000 8,800,000
Accumulated OCI 5,500,000 5,500,000
Treasury stock -700000 - 700,000 131,400,000 #13-a
185,800,000

Current assets
beg. 105,000,000 7,400,000 end
85,000,000 cash payment
12,000,000 exp.
600,000 reg.
105,000,000 105,000,000

Common stock
77,200,000
50,000 100000x.5
77,250,000

Additional paid-in capital

end 40,550,000 36,200,000
reg. 600,000 4,950,000 5M-50000
41,150,000 41,150,000

Retained earnings
end 8,800,000 20,800,000
exp 12,000,000
20,800,000 20,800,000

#14 -#16 Geri & Caiga Corp

Consideration transferred
FV of CS 81600x12 979,200
Liab on contingent consideration 234,000
Total 1,213,200
less: FV of net assets acquired (835,740)
Goodwill 377,460 #14-c

Expenses:
legal fees for contract of business comb 42,720
broker's fees 28,320
accountant's fee 96,000
other direct cost of acq. 90,000
general & allocated expenses 51,600
sub-total 308,640
loss/exp. On contingent consideration 312,000
Total expense 620,640 #15-d

Est. liability on contingent consideration 234,000

loss/expense on contingent consideration 312,000
Cash 546000
 Consideration transferred
FV of CS 45000x12 540,000
Liab on contingent consideration 234,000
Total 774,000
less: FV of net assets acquired (835,740)
Bargain purchase gain (61,740)
total expense 620,640
profit/loss #16-d 558,900 loss

#17 Mapplewood corp-West Corp

Consideration Transferred 500,000

Less: FV of Assets & liab. Acquired

Accounts receivable 180,000
Inventory 400,000
land 50,000
bldgs 60,000
equipment 70,000
patents 20,000
Current lab (70,000)
long-term liab (160,000) 550,000
negative excess-gain (50,000) #17-c

#18-#20 CC Company
Consideration transferred
Common stock 9600x500 4,800,000
FV of net assets
Assets 7,680,000
liabilities 4,320,000 3,360,000
Goodwill 1,440,000 #18: c

Acquisition expense
legal fees 48,000.00
due diligence cost 480,000.00
gen & adm costs 96,000.00
charged to P/L 624,000.00 #19 : a

Consideration transferred
Bonds payable-fair value 4,800,000
FV of net assets 3,360,000
Goodwill 1,440,000 #20:c

#21-#22 Hope Corp

Consideration Transferred
common stock 80000x28 2,240,000 #21-a
Less: FV of Assets & liab. Acquired
Current assets 920,000
plant assets(1800000+200000) 2,000,000
Liabilities (1,200,000) 1,720,000
Good will 520,000 #22-b
#23 Pretzel
Consideration Transferred
CS 30000x25 750,000
PS 15000x100 1,500,000
Cash 50,000 2,300,000

Less: FV of Assets & liab. Acquired

Accounts receivable 198,000
Inventory 330,000
land 550,000
bldgs& equip 1,144,000
Current lab (275,000)
long-term liab (495,000) 1,452,000
goodwill 848,000 #23-d

#24 Philippine airlines

Consideration Transferred
Cash 8,000

Less: FV of Assets & liab. Acquired

Cash 1,400
Receivables 650
Investments 1,000
maintenance supplies 400
flight equipt 12,000
international routes 500
Current lab (3,200)
long-term debt (6,000)
leases 800 7,550
goodwill 450 #24- c

#24 Edina Company

Est. Liab on CC 200,000
Gain on contingent consideration 200,000 c

#25 &#26 Kim Company

Consideration transferred
Cash 4,800,000
FV of net assets
Assets 7,680,000
Liabilities 4,320,000 3,360,000 #25:b
Goodwill 1,440,000 #26:b

#27 Drei Co.

Consideration transferred
Cash -down payment 4800000x20% 960,000
Balance 3840000
PVF 0.8264 3,173,376
Land-FV 1,440,000 5,573,376

FV of net assets
Assets 7,680,000
Liabilities 4320000+468000-480000 4,308,000 3,372,000
Goodwill 2,201,376 #27: b
#28 NT Company
NT OTG Combined
Cash 35,000.00 29,000 64,000.00
Receivables 150,000.00 63,000 213,000.00
Trademarks 400,000.00 225,000 625,000.00
Record music catalog 840,000.00 180,000 1,020,000.0
Equipment(net) 320,000.00 105,000 425,000.00
In-process-R&D 200,000 200,000.00
Goodwill 27,000
Totals 1,745,000.00 802,000 2,574,000.00 #28: c

Accounts payable 110,000.00 34,000 144,000.00

Notes payable 370,000.00 50,000 420,000.00
discount on notes pay (5,000) (5,000.00)
Common stock 460,000.00 460,000.00 #30: d
Addl paid in capital 695,000.00 695,000.00 #31: c
Retained Earnings 860,000.00 860,000.00 #32: c
Totals 2,495,000.00 79,000 2,574,000.00
Consideration transferred
common stock 15000 4 60,000
exess of par 15000 46 690,000 750,000

FV of net assets
Assets 802,000
Liabilities (79,000) 723,000
Goodwill 27,000
Common stock 400000+60000 460,000
Addl-paid-in capital 30000+690000-25000 695,000
Cash60000-25000 35000

Total liabilities 144000+420000-5000 559,000 #29- d

#24-# 30 PP Inc
Consideration transferred
CS 50000 5 250,000
excess 50000 15 750,000
Total fair value 1,000,000
Cont. consideration
130000x.961538x50% 62,500
Total consideration transferred 1,062,500 #24: d

Addl. Paid-in capital

Beg. Bal 400,000
from addl issuance 750,000 1,150,000
stock issuance cost (9,000)
Total 1,141,000 #25: c

Expenses for 2014. 875000+15000 890,000 #26: d

Net income for 2014

Net income as reported 325,000
acquisition expense (15,000)
Net income 310,000 b#27: b

Retained Earnings, as reported 1,185,000

adj. for acquisistion exp (15,000)
Retained Earnings 1,170,000 #28: b
original entry for acquisition:
Cash 85,000
REceivABLES & INVENTORY 180,000
ppe 600,000
Trademark 200,000
in process R&D 100,000
goodwill 77,500
liabilities 180,000
Common stock 250,000
APIC 750,000
contingent consideration 62,500
1242500 1242500 0

Revised contingent cosideration 75,000

previous estimate of Cont. cons. 62,500
Increase in goodwill 12,500
original goodwill 77,500
Amount of goodwill as revised 12/31/14 90,000 #29: d

Goodwill 12,500
est. liab. On contingent consideration 12,500

#30: b. goodwill obligation

90,000 80,000 b

goodwill can only be revised once but adjust the liability to P80,000.
loss on contingent consideration 5000
est. liab. Contingent consideration 5000

#31. Axel - Ayala

Excess probability Amount/peso Total
10,000,000 0.2 5 10,000,000
15,000,000 0.1 5 7,500,000
17,500,000
PV factor 12% end of 4 yrs 0.635518
Value of earnout 11,121,565.00 a

Raphael Co.
#32 fair value of equipt. 640,000 a

Company Y-Company X
#33.:a
Goodwill 800,000
Building 800,000

Bolton Co.
#34.50000x.90909 45,455 a

#35. Tingling Co.

Consideration transferred
Cash 200,000,000
contingent consideration 10,000,000
Total 210,000,000
Less: FV of net assets 116,000,000
Goodwill 94,000,000 c

#36.d

#37.b Dasmann
#38-41 Salt Co - Pail Co.
Fair value of net assets
Current assets 1,500,000
PPE,net 35,000,000
patents 2,000,000
completed technology 10,000,000
broader customer base 16,000,000 off
technically skilled workforce 3,000,000 off
Potentially profitable future contracts 2,000,000 off
licensing agreements 4,000,000
potential contracts with customers 1,500,000 off
advertising jingles 1,000,000 off
future cost savings 1,800,000 off
liabilities (30,000,000)
Total FV of net assets 47,800,000
#38
Contingent Considerations 100,000,000
less:Fair value of net assets
Current assets 1,500,000
PPE,net 35,000,000
patents 2,000,000
completed technology 10,000,000
licensing agreements 4,000,000
liabilities (30,000,000)
Total FV of net assets 22,500,000 22,500,000
positive excess-goodwill 77,500,000 38:d

#39.
Contingent Considerations 10,000,000
less:Fair value of net assets
Current assets 1,500,000
PPE,net 35,000,000
patents 2,000,000
completed technology 10,000,000
licensing agreements 4,000,000
liabilities (30,000,000)
Total FV of net assets 22,500,000 22,500,000
negative excess-bargain purchase gain (12,500,000) #39:b

#40 c
Goodwill 2,000,000
patent 2,000,000

#41.a.
bargain purchase gain 2,000,000
liabilities 2,000,000

#42-#43 Ping Company

#42.c
Goodwill 400,000
Expected lawsuit liability 400,000

#43.b.
Loss on lawsuit 400,000
Expected lawsuit liability 400,000
#44 -#46 Netcom
Consideration transferred
common stock 400,000,000
cash 50,000,000
PIC-stock contingency 20,000,000
Total 470,000,000
Less: FV ofnet Assets
Assets 570,000,000
liabilities (100,000,000) 470,000,000
#44 b
Assets 570,000,000
liabilities 100,000,000
common stock 400,000,000
PIC-stock contingency 20,000,000
cash 50,000,000

#45.
Required 350,000,000
Existing 25000000 x12 300,000,000
new 50,000,000
50000000/12 shares 4,166,667 b

#46.c
PIC-stock contingency 20,000,000
PIC-others 30,000,000
Common stock 50,000,000

Polk Co
#47 b

P Co.
#48 c

#49 P.Co.
decreasein paid-in capital c

#50-#53 Bullen Inc.

Consideration transferred(12000x47) 564,000
fair value
Cash & receivables 70,000.00
Inventory 210,000.00
Land 240,000.00
Buildings,net 270,000.00
Equipment (net) 90,000.00
Total 880,000.00
liabilities (420,000.00)
Net assets 460,000.00 460,000
Goodwill 104,000 #50:b
issued balance combined
Common stock 60,000
Addl Paid-in capital(12000x37) 444,000 20,000 464,000 #51:d
Total consideration 504,000

Retained earnings 160,000 160,000 #51: d

Bullen Vicker Combned

Inventory 230000 210,000 440,000 #52:b
Land 280000 240,000 520,000 #52:b
Consideration transferred 480000
net assets 460000
goodwill 20,000 #53:b

#54. AA Inc. & WS Corp.

APIC Ret. Earnings
APIC 51000x2 102,000
APIC 90,000 300000
Total 192,000.00 300,000.00 c

#55. Pat Corp.

Plant & equipmt. 220,000.00 a

#56. Balter Inc.

Fair Value Life Depr.
Bldg 130000 10 13,000
Equipt. 75000 5 15,000
28,000 c

#57. & 58 North Co.

Consideration transferred
Common stock 24000x30 720,000
FV of net assets (686,400)
goodwill 33,600 #57:c

Consideration transferred 720,000

FV of net assets
Currenct assets 270,000
PPE 726,000
liabilities (168,000) 828,000
Gain (108,000) #58: d

#59 Publics Co.

Consideration transferred 800,000
Less: Fv of net assets
Current assets 800,000
non-current assets 600,000
liabilities (400,000) 1,000,000
Gain (200,000) c

#60-#61 Devon Co.

cost of bldg 180,000
Accum depr. (180000/30x3) 18,000
net book value 162,000 #60: b

Consideration transferred
Bldg. (net book value) 162,000
cash 50,000
Land 100,000
Consideration transferred 312,000
Divide by 15,000 shares
fair value 20.8
less: par value 10
excess 10.8
multiply 15000 shares
APIC 162,000 #61: c
or
Net assets (100000+50000+162000) 312,000
less: shares issued at par 15000x10 150,000
APIC 162,000
#62. Geek Co.
c Gain on bargain purchase of P8M shld be recognized in profit or loss

#63. Homer Ltd.

Consideration transferred
Shares 2/3 x 60000xP3.20 128000
Cash
A/P (43500+1600) 45,100
mortgage 40,000
interest on mortgge 4,000
debentures & premiums(50Tx105%) 52,500
liquidation exp 2,400
Total 144,000
Less: cash bal. 12,000 132,000
Total consideration transferred 260,000
Less: fair value of net asset
A/R 34,700
Inventory 39,000
Freehold Land 130,000
Bldgs net 40,000
PPE,net 46,000 289,700
Bargain purchase gain (29,700) c

#64 & 65. ACME

Bldg 100,000 #64: d

Selling price 110,000

less: BV of net assets
current assets 50,000
bldg 80,000
equipt 40,000
liabilities (30,000) 140,000
loss on disposal (30,000) #65: c

#66.-#71 TT Corp. & SS Corp.

TT SS post balance sheet
Cash 49,000 30,000 79,000
Receivables 110,000 45,000 155,000
Inventory 130,000 85,000 215,000 #66:d
Land 80,000 45,000 125,000
Bldgs & Equip(net) 277,000 235,000 512,000
Inv. In SS Corp. stocks 198,000
goodwill 23,000 23,000 #67:b
Total 844,000 1,109,000 #68:c

Accounts payable 61,500 28,000 89,500

Taxes payable 95,000 37,000 132,000
Bonds payable 280,000 200,000 480,000
Total liabilities 701,500 #69:c
Common stock 150,000 150,000
Retained Earnings 257,500 257,500 #70#d
Total SHE 407,500 #71:a
Totals 844,000 1,109,000
Journal entries

Cash 30000
Receivables 45000
Inventory 85000
Land 45000
Bldgs & Equip(net) 235000
Goodwill 23000
Accounts payable 28000
Taxes payable 37000
Bonds payable 200000
Investment in SS 198000
463000 463000 0

#72 & 73
Consideration transferred
cash 392,640
FV of net assets
Assets 1,254,720 squeeze
Liablities 683,520 571,200 squeeze
Gain on acquisiion (178,560)

Assets -fair value unadjusted 1,198,080

Adjustments:
obsolete mercandise (76,800)
unrecorden van 230,400
Total 1,351,680
Adjusted FV of assets 1,254,720
Decrease in FV of machinery & equip 96,960
less:BV of machinery & equip 414,720
FV of machenery & equipment 317,760 #72-d
none of the above
Consideration transferred
cash 1,244,400
FV of net assets
Assets 1,445,520
Liablities 683,520 762,000
Goodwill 482,400

Assets -fair value unadjusted 1,198,080

Adjustments:
obsolete mercandise (76,800)
unrecorden van 230,400
Total 1,351,680
Adjusted FV of assets 1,445,520
in crease in FV of machinery & equip 93,840
add: BV of machinery & equip 619,800
FV of machenery & equipment 713,640 #73: b

#74-76 XX Co. - YY Company

Consideration transferred
Common stock 2,058,000
Cash 450,000
est, contingent consideration 177,600 2,685,600

Less: FV of net assets 1,909,200 squeeze

goodwill 776,400
 FV of net assets 1,909,200
FV of liabiiities 636,000
FV of Asssets 2,545,200
BV of assets 2,580,000
overvaluation of FF 34,800 #74-c

Total assets of XX Co.bef. Acquisition 5,868,000

cash paid to YY Co. 450,000
450,000
Total 5,418,000
FV of assets acquired 2,545,200
combined total identifiable assets 7,963,200 #75: c

liabilities acquired 636,000

accreued expenses 33,600
Est. contingent liab 177,600
increase in liabilities 847,200 #76: b

#77 ReSA Co.

Consideration transferred
Cash 20,940,000
contingent consideration 561,600 21,501,600
Less: FV of net assets
Net assets provisional value 20,178,000
less: adjustments (1,128,000) 19,050,000
Goodwill 2,451,600 c

#78& 79 Porpoise Corp & Sims Co.

Paid in capital befor issuance 200000+350000 550,000

Paid in capital after issuance 250000+550000 800,000
paid in capital at time of exchange 250,000
Divde by fair value of shares 20
addl.Shares issued 12,500

Par value of shares outstanding befor issuance 200000

Par value of shares outstanding after issuance 250000
par value of additional shares issued 50000
divide by additional shares issued 12500
Par value per share 4 #78: c

consideration transferred 12500x20 250,000

Goodwill 56,000
net assets acquired 194,000 #79: a

#80 Bluetown
SHE befor acquisition 700000+980000 1,680,000
shares issued 34000x35 1,190,000
consolidated net assets 2,870,000 a

#81.Vibe Co. d
#82-86 Zykel Corp.
Common stock combined 160,000
Common stock -Zykel 100,000
60,000
divide by par value 2
No. of shares issued 30,000 #82: c

Paid-in capital-combined 160000+245000 405,000

Paid-in capital- Zykel bef. Acq.100000+65000 165,000
Paid-in capital -addl shares 240,000
divide no. f shares issued 30,000
fair value of stock 8 #83-d
or
par value of zykel stock 2
add: share premium (245000-65000)/30000 6
fair value of stock 8

Net identifiable assets-combined 497,000

Net identifiable assets of zykel befor acquisition 270,000
Fair value of net identifiable assets acquired 227,000 #84:b

Consideration transferred 30000x8 240000

FV of net identifiable assets 227000
goodwill 13,000 #85: a

Retained earnings 105,000 #86:c

#87. Bats, Inc.

II JJ Total
Ave. annual eaarnings 46080 69120 115,200
Divide by: capitalized at 10%
Total stock to be issued 1,152,000
less: net assets (for P/S) 864,000
Goodwill for common stock 288,000 #87:a
Preferred stock 864000/100 8,640 #87:a
720,000 921,600
432,000 345,600
net assets 288,000 576,000 864,000