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19 views

Quiz Buscom

Uploaded by

janellemoralest
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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COLLEGE OF BUSINESS AND ACCOUNTANCY

Mabini Extension, Cabanatuan City

Name: Score:
Year & Block: Date:

AC 11/MAC 2b – Accounting for Business Combinations


Midterm Quiz #1

PROBLEM 1. On January 1, 20x1, Bebe Co. issued equity instruments in exchange for 75%
interest in Time Co. On acquisition date, Bebe Co. elected to measure non-controlling
interest at fair value. Bebe Co.’s management believes that the fair value of the
consideration transferred correlates to the fair value of the controlling interest acquired and
that the fair value of the controlling interest is proportionate to the fair value of the
remaining interest.

Time Co.’s net identifiable assets have carrying amount and fair value of ₱300,000 and
₱360,000, respectively. The difference is attributable to a building with a remaining useful
life of 6 years.

The December 31, 20x1 statements of financial position of Bebe Co. and Time Co. are
summarized below:

Bebe Co. Time Co.


ASSETS
Investment in subsidiary (at cost) 300,000 -
Other assets 1,372,000 496,000
TOTAL ASSETS 1,672,000 496,000

LIABILITIES AND EQUITY


Trade and other payables 292,000 120,000
Share capital 940,000 200,000
Retained earnings 440,000 176,000
Total equity 1,380,000 376,000
TOTAL LIABILITIES AND EQUITY 1,672,000 496,000

No dividends were declared by either entity during year. There were also no inter-company
transactions and impairment in goodwill.

1. What amount of goodwill is presented in the consolidated statement of financial position


on December 31, 20x1?

2. How much is the consolidated total assets as of December 31, 20x1?

3. How much is the non-controlling interest in the net assets of the subsidiary on December
31, 20x1?

4. How much is the consolidated retained earnings on December 31, 20x1?

5. How much is the consolidated total equity on December 31, 20x1?

PROBLEM 2. On January 1, 20x1, Pagod Na Co. acquired 80% interest in Noche Buena Na
Sana Co. by issuing bonds with fair value of ₱250,000. NCI is measured at proportionate
share. The following information was determined immediately before the acquisition:
Noche Buena Na Noche Buena Na
Pagod Na Co. Sana Co. Sana Co.
Carrying
amount Carrying amount Fair value
Total assets 1,000,000 400,000 430,000
Total liabilities (600,000) (200,000) (200,000)
Net assets 400,000 200,000 230,000

Included in Noche Buena Na Sana’s liabilities is an account payable to Pagod na amounting


to ₱20,000.

1. How much is the total assets in Pagod Na’s separate financial statements immediately
after the combination?

2. How much is the total assets in the consolidated financial statements?

Prepared by:

GLYZELLE ANN Y. FERNANDEZ, CPA


Course Instructor

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