De Jesus, Tracy Marie L.

BSA-3

II. Statutory Merger: Valuation of Assets and Liabilities, Consideration Transferred, Goodwill and Bargain Purchase
Required:
(1) Books of Acquiree/Acquiring
Acquisition of assets and liabilities:
Cash 90,000
Receivables 190,000
Inventories 7,000,000
Plant & equipment 40,000,000
Trademarks 4,000,000
Brand names 5,000,000
Secret formulas 7,000,000
Goodwill 6,520,000
Current liabilities 400,000
Long-term liabilities 47,000,000
Cash 18,000,000
Estimated liability for Contingent Consideration 400,000
Common stock, P2 par x 50,000 shares 100,000
Share premium/APIC (P80-P2) x 50,000 shares 3,900,000
Consideration transferred:
Cash 18,000,000
Prob. PV of Contingent Consideration - given or,
P1,000,000 x 40% probability 400,000

Common stock (P80 x 50,000 shares) 4,000,000

Consideration transferred 22,400,000
Less: MV of Assets and Liabilities Acquired:
Cash 90,000
Receivables 190,000
Inventories 7,000,000
Plant & equipment, net 40,000,000
Trademarks 4,000,000
Brand names 5,000,000
Secret formulas 7,000,000
Current liabilities (400,000)
Long-term liabilities (47,000,000) 15,880,000
Positive excess: Goodwill 6,520,000

Acquisition expenses (1,000,000 + 100,000)

Acquisition -related expenses/Returned earnings/Accum. P&L 1,100,000
Cash 1,100,000
Costs to Issue and Register Stocks (300,000 + 200,000)
Share premium/APIC 500,000
Cash 500,000
 (2) Books of Acquirer/Acquiring

Acquisition of assets and liabilities:

Cash 90,000
Receivables 190,000
Inventories 7,000,000
Plant & equipment 40,000,000
Trademarks 4,000,000
Brand names 5,000,000
Secret formulas 7,000,000
Noncompetition agreements 10,000,000
Current liabilities 400,000
Long-term liabilities 47,000,000
Cash 18,000,000
Estimated liability for Contingent Consideration 400,000
Common stock, P2 par x 50,000 shares 100,000
Share premium/APIC (P80-P2) x 50,000 shares 3,900,000
Retained earnings (Gain on acquisition) 3,480,000
Consideration transferred:
Cash 18,000,000
Prob. PV of Contingent Consideration - given or,
P1,000,000 x 40% probability 400,000

Common stock (P80 x 50,000 shares) 4,000,000

Consideration transferred 22,400,000
Less: MV of Assets and Liabilities Acquired:
Cash 90,000
Receivables 190,000
Inventories 7,000,000
Plant & equipment, net 40,000,000
Trademarks 4,000,000
Brand names 5,000,000
Secret formulas 7,000,000
Current liabilities (400,000)
Long-term liabilities (47,000,000) 25,880,000
Negative excess: Gain on acquisition (3,480,000)

Acquisition expenses (1,000,000 + 100,000)

Acquisition -related expenses/Returned earnings/Accum. P&L 1,100,000
Cash 1,100,000
Costs to Issue and Register Stocks (300,000 + 200,000)
Share premium/APIC 500,000
Cash 500,000

(3) Post-Combination Balance Sheet: (requirement 1)

Assets Liabilities and Stockholders' Equity

Cash 5,490,000 Current liabilities 900,000
Receivables 2,190,000 Estimated liability for Cont. Cons. 400,000
Inventories 27,000,000 Long-term liabilities 117,000,000
Plant & equipment 139,500,000
Trademarks 9,000,000 Common stock 2,100,000
Brand names 5,000,000 Paid-in Capital - par 58,400,000
Secret formulas 7,000,000 Retained earnings 23,900,000
Goodwill 6,520,000 Treasury stock (1,000,000)
Total 201,700,000 Total 201,700,000
Post-Combination Balance Sheet: (requirement 2)

Assets Liabilities and Stockholders' Equity

Cash 5,490,000 Current liabilities 900,000
Receivables 2,190,000 Estimated liability for Cont. Cons. 400,000
Inventories 27,000,000 Long-term liabilities 117,000,000
Plant & equipment 139,500,000
Trademarks 9,000,000 Common stock 2,100,000
Brand names 5,000,000 Paid-in Capital - par 58,400,000
Secret formulas 7,000,000 Retained earnings 27,380,000
Noncompetition agreement -10,000,000 Treasury stock -1,000,000
Total 205,180,000 Total 205,180,000

(4)

Post-Combination Balance Sheet: (requirement 1) Post-Combination Balance Sheet: (requirement 2)

a. Total Assets = 201,900,000 a. Total Assets = 205,180,000
b. Total Liabilities = 118,300,000 b. Total Liabilities = 118,300,000
c. Additional paid-in capital (Share premium) = 58,400,000 c. Additional paid-in capital (Share premium) = 58,400,000
d. Retained earnings (accum. profit or loss) = 23,900,000 d. Retained earnings (accum. profit or loss) = 27,380,000
e. Stockholders'/Shareholders' Equity = 83,400,000 e. Stockholders'/Shareholders' Equity = 86,880,000

III – Assets and Liabilities Acquired, Goodwill and Bargain Purchase Gain, Contingent Consideration, Changes in Contingent
Consideration

Required:

(1)

a. Assets of Pop: (81,000,000 - 1,100,000) 79,900,000

Assets of Sicle:
Current Assets 1,500,000
Investment 500,000
Land 6,000,000
Building, net 16,000,000
Equipment, net 2,000,000
Initial Goodwill 5,000,000
Goodwill 22,500,000 53,400,000
Total Assets 133,400,000

b. Liabilities of Pop:(4,000,000 + 20,000,000) 24,000,000

Liabilities of Sicle:
Current liabilities 1,500,000
Long-term liabilities 12,000,000 13,500,000
Total Liabilities 37,500,000

74,900,0
c. Pop: (40,000,000+(90x400,000)-1,100,000) 00
Sicle: -
74,900,0
APIC (Share Premium) 00

d. Pop:
Sicle: -
Retained Earnings (AP/L)

e. Pop: (5,000,000+(10x400,000) 9,000,000

APIC (Share Premium) - (C) 74,900,000
Retained Earnings (AP/L) - (D) 12,000,000
Stockholders' Equity 95,900,000
(2)

a. Assets of Pop: (81,000,000-540,000) 80,460,000

Assets of Sicle:
Current Assets 1,500,000
Investment 500,000
Land 6,000,000
Building, net 16,000,000
Equipment, net 2,000,000
Identifiable Goodwill 5,000,000 31,000,000
Total Assets 111,460,000

b. Liabilities of Pop: (4,000,000+20,000,000+200,000) 24,200,000

Liabilities of Sicle:
Current Liabilities 1,500,000
Long-term Liabilities 12,000,000 13,500,000
37,700,000

c. Pop: (40,000,000+(90x90,000 shares)+300,000) 48,400,000

Less: Stock Issuance Cost:
DS 20,000
SEC Reg. Fee 90,000
Printing costs SC 50,000 160,000
APIC of Pop 48,240,000
Sicle: -
APIC (Share Premium) 48,240,000

d. Pop: RE, Initial 12,000,000

Legal fees (80,000)
Broker;s fee (40,000)
Accountant's fee for pre-acquisition audit (100,000)
Other direct cost of acquisition (70,000)
Internal secretarial, general and allocated exp (60,000)
Stock exchange listing fee (30,000)
Total 11,620,000
Negative Goodwill/Gain 8,000,000
Sicle: -
Retained Earnings (AP/L) 19,620,000

e. Pop: 5,000,000 + (10 x 90,000) 5,900,000

APIC (Share Premium) - (e) 48,240,000
Retained Earnings (AP/L) - (d) 19,620,000
Stockholders' Equity 73,760,000

(3) Consideration transferred:

Shares (100,000 x P100) 10,000,000
Estimated liability for Contingent Cons. 8,000,000
Consideration transferred 18,000,000
Less: MV of Assets and Liabilities Acquired:
Current Assets 1,500,000
Investments 500,000
Land 6,000,000
Buildings 16,000,000
Equipment 2,000,000
Identifiable intangible 5,000,000
Current Liabilities -1,500,000
Long-term liabilities -12,000,000 -17,500,000
 Positive excess: Goodwill 500,000
(4)

8,000,000 - 7,800,000 = 200,000

a. Within Meaurement Period
Estimated Liability for Contingent Consideration 200,000
Goodwill 200,000
b. Due to subsequent events
Estimated Liability for Contingent Consideration 200,000
Gain on Acquisition 200,000

Gain on Acquisition 200,000

Retained Earnings 200,000

IV. Valuation of Assets acquired and Liabilities assumed, Measurement of Consideration Transferred Change in value of Assets
acquired, Pre-acquisition Contingency, in-process R&D

Required:

(1) Cash and receivables 200,000,000

Inventories 400,000,000
Property, plant & equipment 5,500,000,000
Customer contracts 25,000,000
In-process R&D 300,000,000
Goodwill 2,035,000,000
Current liabilities 400,000,000
Long-term debt 7,300,000,000
Warranty liability 10,000,000
Estimated liability for Cont. Cons. 50,000,000
Ordinary shares 700,000,000

Consideration transferred;
Shares 700,000,000
Estimated liability for Cont. Cons. 50,000,000
Consideration transferred 750,000,000
Less: MV of Assets and Liabilities Acquired:
Cash and receivables 200,000,000
Inventories 400,000,000
Property, plant & equipment 5,500,000,000
Customer Contracts 25,000,000
In-process R&D 300,000,000
Current liabilities (400,000,000)
Long-term debt (7,300,000,000)
Warranty liability (10,000,000) (1,285,000,000)
Positive excess: Goodwill 2,035,000,000

Acquisition expenses
Acquisition-related expenses/Retained earnings 150,000,000
Cash 150,000,000

Costs to Issue and Register Stocks

Share premium/APIC 100,000,000
Cash 100,000,000

(2) Goodwill 1,500,000,000

Property, plant & equipment 1,500,000,000