P1.

Prepare all elimination entries and compute for the following: (1) total combined assets, (2) total combined liabilities,
December 1, 2020 P Company S Company S Company
Book Value Book Value Fair Value
Assets
Cash 230,000 0 0
Accounts receivable 40,000 32,000 35,000
Inventory 50,000 20,000 23,000
Equipment – net 180,000 158,000 156,000
Total Assets 500,000 210,000 214,000 4,000

Accounts payable 280,000 110,000 112,000 2,000

Common stock 100,000 50,000
Additional paid-in capital 80,000 30,000
Retained earnings 40,000 20,000
Total Liabilities and Equity 500,000 210,000

Case 1: P Company acquires all of S Company’s outstanding common stock for P102,000 cash.

Investment in S Company 102,000

Cash 102,000

Common stock - S Company 50,000

Additional paid-in capital - S Company 30,000
Retained earnings - S Company 20,000
Investment in S Company 100,000 2,000

Accounts receivable 3,000

Inventory 3,000
Equipment – net 2,000
Accounts payable 2,000
Investment in S Company 2,000

Case 2: P Company acquires 100% of S Company’s outstanding common stock for 110,000 in cash.

Investment in S Company 110,000

Cash 110,000

Common stock - S Company 50,000

Additional paid-in capital - S Company 30,000
Retained earnings - S Company 20,000
Investment in S Company 100,000

Accounts receivable 3,000

Inventory 3,000
Goodwill 8,000
Equipment – net 2,000
Accounts payable 2,000
Investment in S Company 10,000

Case 3: P Company acquires all of S Company’s outstanding common stock for 90,000 in cash.

Investment in S Company 90,000

 Cash 90,000

Common stock - S Company 50,000

Additional paid-in capital - S Company 30,000
Retained earnings - S Company 20,000
Investment in S Company 100,000 10,000

Accounts receivable 3,000

Inventory 3,000
Equipment – net 2,000
Accounts payable 2,000
Investment in S Company 2,000

Investment in S Company 12,000

Retained earnings (Bargain Purchase) 12,000

P2. Prepare all elimination entries and compute for the following: (1) total combined assets, (2) total combined liabilities,

December 1, 2020 P Company S Company S Company

Book Value Book Value Fair Value Difference
Assets
Cash 218,000 0 0
Accounts receivable 144,000 40,000 40,000 0
Inventory 160,000 100,000 110,000 10,000
Land 200,000 80,000 130,000 50,000
Building (net) 840,000 300,000 500,000 200,000
Equipment (net) 400,000 80,000 120,000 40,000
Total Assets 1,962,000 600,000 900,000 300,000

Accounts payable 160,000 80,000 80,000 0

Bonds payable 400,000 200,000 200,000 0
Common stock, P10 (P), P1 (S) 400,000 20,000
Additional paid-in capital 500,000 180,000
Retained earnings 502,000 120,000
Total Liabilities and Equity 1,962,000 600,000 280,000

Case 4: P Company issued 16,000 shares of its P10 par value common stock for 80% of the outstanding shares of S Co
The fair value of P Company’s stock is P50 and the fair value of the NCI is assessed to be P170,000.
80% 20%
Total FV Parent NCI
Company consideration 970,000 800,000 170,000 Higher than share on FVNA
Fair Value of Net Assets (FVNA) 620,000 496,000 124,000
Goodwill 350,000 304,000 46,000

Investment in S Company (16,000 * 50) 800,000 Computation of G

Common stock (16,000 * 10) 160,000 Consideration given
Additional paid-in capital (16,000 * 40) 640,000 NCI
Less:
Common stock - S Company 20,000
Additional paid-in capital - S Company 180,000
Retained earnings - S Company 120,000 Goodwill
Investment in S Company 256,000
Non-controlling interest 64,000
Inventory 10,000
Land 50,000
Building (net) 200,000
Equipment (net) 40,000
Goodwill 350,000
Investment in S Company 544,000
Non-controlling interest 106,000

Case 5: P Company issued 16,000 shares of its P10 par value common stock for 80% of the outstanding shares of S Co
The fair value of P Company’s stock is P50 and the fair value of the NCI is assessed to be P120,000.
80% 20%
Total FV Parent NCI
Company consideration 920,000 800,000 120,000
Fair Value of Net Assets (FVNA) 620,000 496,000 124,000 Higher
Goodwill 300,000 304,000 (4,000)

Total FV Parent NCI

Company consideration 924,000 800,000 124,000
Fair Value of Net Assets (FVNA) 620,000 496,000 124,000 Higher
Goodwill 304,000 304,000 -

Investment in S Company (16,000 * 50) 800,000 Computation of G

Common stock (16,000 * 10) 160,000 Consideration given
Additional paid-in capital 640,000 NCI
Less:
Common stock - S Company 20,000
Additional paid-in capital - S Company 180,000
Retained earnings - S Company 120,000 Goodwill
Investment in S Company 256,000
Non-controlling interest 64,000

Inventory 10,000
Land 50,000
Building (net) 200,000
Equipment (net) 40,000
Goodwill 304,000
Investment in S Company 544,000
Non-controlling interest 60,000

Case 6: P Company issued 8,000 shares of its P10 par value common stock for 80% of the outstanding shares of S Com
80% 20%
Total FV Parent NCI
Company consideration 500,000 400,000 100,000
Fair Value of Net Assets (FVNA) 620,000 496,000 124,000 Higher
Gain on Acquisition

Total FV Parent NCI

Company consideration 524,000 400,000 124,000
Fair Value of Net Assets (FVNA) 620,000 496,000 124,000 Higher
Gain on Acquisition (96,000) (96,000) -

Investment in S Company (8,000 * 50) 400,000 Computation of G

Common stock (8,000 * 10) 80,000 Consideration given
 Additional paid-in capital 320,000 NCI
Less:
Common stock - S Company 20,000
Additional paid-in capital - S Company 180,000
Retained earnings - S Company 120,000 Bargain Purchase
Investment in S Company 256,000
Non-controlling interest 64,000

Inventory 10,000
Land 50,000
Building (net) 200,000
Equipment (net) 40,000
Retained Earnings - Bargain Purchase 96,000
Investment in S Company 144,000
Non-controlling interest 60,000
2) total combined liabilities, (3) total combined equity and (4) goodwill or bargain purchase.

Consideration given 90,000

Net fair value assets (subsidiary) 102,000
Goodwill/Bargain purchase (12,000)

Common stock 50,000

Additional paid-in capital 30,000
Retained earnings 20,000
Excess FV 2,000
Net fair value assets 102,000
Consideration given 90,000
Goodwill/Bargain purchase (12,000)

Assets Computation of Goodwill or Gain on Acquisition

Cash 128,000 Common stock
Accounts receivable 75,000 Additional paid-in capital
Inventory 73,000 Retained earnings
Equipment – net 336,000 Excess of FV
Total Assets 612,000 Total
Consideration given
Accounts payable 392,000 No goodwill or Gain on acquisitio
Common stock 100,000
Additional paid-in capital 80,000 Net assets at fair value
Retained earnings 40,000 Consideration given
Total Liabilities and Equity 612,000 No goodwill or Gain on acquisitio

*No goodwill or bargain purchase

0,000 in cash.

Assets Computation of Goodwill or Gain on Acquisition

Cash 120,000 Common stock
Accounts receivable 75,000 Additional paid-in capital
Inventory 73,000 Retained earnings
Equipment – net 336,000 Excess of FV
Goodwill 8,000 Total
Total Assets 612,000 Consideration given
Goodwill
Accounts payable 392,000
Common stock 100,000 Net asset at fair value
Additional paid-in capital 80,000 Consideration given
Retained earnings 40,000 Goodwill
Total Liabilities and Equity 612,000

Assets Computation of Goodwill or Gain on Acquisition

 Cash 140,000 Common stock
Accounts receivable 75,000 Additional paid-in capital
Inventory 73,000 Retained earnings
Equipment – net 336,000 Excess of FV
Total Assets 624,000 Total
Consideration given
Accounts payable 392,000 Gain on Acquisition
Common stock 100,000
Additional paid-in capital 80,000 Net assets at fair value
Retained earnings 52,000 Consideration given
Total Liabilities and Equity 624,000 Gain on Acquisition

2) total combined liabilities, (3) total combined equity and (4) goodwill or bargain purchase.

Assets @ FV 900,000
Liabilities @ FV 280,000
Net assets @ FV 620,000

Common stock, P10 (P), P1 (S) 20,000

Additional paid-in capital 180,000
Retained earnings 120,000
Excess FV 300,000
Net assets @ FV 620,000

outstanding shares of S Company.

r than share on FVNA

Computation of Goodwill / Bargain Purchase Assets

Consideration given 800,000 Cash
170,000 Accounts receivable
Less: Inventory
Equity of Subsidiary 320,000 Land
Increase in FV 300,000 Building (net)
Goodwill 350,000 Equipment – net
Goodwill
Total Assets
 Accounts payable
Bonds payable
Common stock
Additional paid-in capital
Retained earnings
NCI
Total Liabilities and Equity

outstanding shares of S Company.

Computation of Goodwill / Bargain Purchase Assets

Consideration given 800,000 Cash
124,000 Accounts receivable
Less: Inventory
Equity of Subsidiary 320,000 Land
Increase in FV 300,000 Building (net)
Goodwill 304,000 Equipment – net
Goodwill
Total Assets

Accounts payable
Bonds payable
Common stock
Additional paid-in capital
Retained earnings
NCI
Total Liabilities and Equity

utstanding shares of S Company. The fair value of P Company’s stock is P50.

"Implied value of NCI"

400,000.00 80%
100,000.00 20%

Computation of Goodwill / Bargain Purchase Assets

Consideration given 400,000 Cash
 124,000 Accounts receivable
Less: Inventory
Equity of Subsidiary 320,000 Land
Increase in FV 300,000 Building (net)
Bargain Purchase -96,000 Equipment – net
Total Assets

Accounts payable
Bonds payable
Common stock
Additional paid-in capital
Retained earnings
NCI
Total Liabilities and Equity
will or Gain on Acquisition
50,000
30,000
20,000
2,000
102,000
102,000
-

102,000
102,000
-

will or Gain on Acquisition

50,000
30,000
20,000
2,000
102,000
110,000
8,000

102,000
110,000
8,000

will or Gain on Acquisition

 50,000
30,000
20,000
2,000
102,000
90,000
(12,000)

102,000
90,000
12,000

218,000
184,000
270,000
330,000
1,340,000
520,000
350,000
3,212,000
 240,000
600,000 840,000
560,000
1,140,000
502,000
170,000
3,212,000

218,000
184,000
270,000
330,000
1,340,000
520,000
304,000
3,166,000

240,000
600,000 840,000
560,000
1,140,000
502,000
124,000
3,166,000

218,000
 184,000
270,000
330,000
1,340,000
520,000
2,862,000

240,000
600,000 840,000
480,000
820,000
598,000
124,000
2,862,000