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The document outlines a problem-solving quiz for accounting students involving two case studies of company acquisitions. Students are required to determine goodwill or gain on bargain purchases, provide adjusting entries, and prepare Statements of Financial Position for the acquiring companies. The quiz includes grading rubrics for both computations and journal entries.

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aokieslieanne
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14 views

02_Quiz_1(24)

The document outlines a problem-solving quiz for accounting students involving two case studies of company acquisitions. Students are required to determine goodwill or gain on bargain purchases, provide adjusting entries, and prepare Statements of Financial Position for the acquiring companies. The quiz includes grading rubrics for both computations and journal entries.

Uploaded by

aokieslieanne
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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BM2010

NAME: DATE: SCORE:

PROBLEM-SOLVING: (30 points: 6 items x 5 points)


Direction: Read the cases below and solve for what are being asked.

1. On January 1, 20X2, Tanangonan Company acquired all the assets and assumed all the liabilities of Ong
Company. In exchange for its net assets of Ong, Tanangonan gave its bond payable with a maturity value
of P600,000 with a stated rate of 10% interest, payable semiannually on June 30 and December 31. The
said bond will also mature on January 1, 20X2, and has a yield rate of 12%.

The Statement of Financial Position (SFP) of both companies as of January 1, 20X2 were as follows:

Tanangonan Ong
Book Value Book Value Fair Value
Cash P250,000 P114,000 P114,000
Receivables 352,700 150,000 135,000
Inventories 848,300 232,000 310,000
Land 700,000 100,000 315,000
Buildings 950,000 410,000 54,900
Accumulated Depreciation – Buildings (325,000) (170,500)
Equipment 262,750 136,450 39,450
Accumulated Depreciation – Equipment (70,050) (90,450)
Total Assets P2,968,700 P881,500 P968,350

Current Liabilities P292,700 P95,300 P95,300


Bond Payable 300,000 260,000
Common Stock, P15 par value 1,200,000
Common Stock, P5 par value 236,500
Other Contributed Capital 950,000 170,000
Retained Earnings 526,000 79,700
Total Equities P2,968,750 P881,500

Required:

1. Determine the goodwill or gain on bargain purchase from the above acquisition.

2. Give the adjusting entries that will be made in the book of Tanangonan.

3. Prepare the Statement of Financial Position (SFP) of Tanangonan after the merger.

02 Quiz 1 *Property of STI


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BM2010

2. Ariadne Corporation acquired the net assets of Turgo Corporation by issuing 10,000 ordinary shares with a
par value of P10 and bonds payable with a face amount of P500,000. The bonds are classified as a financial
liability at amortized cost.

At the time of acquisition, the ordinary shares are publicly quoted at P20 per share. On the other hand, the
bonds payable, classified as a financial liability at amortized cost, are trading at 110.

Ariadne paid P10,0000 share issuance costs and P20,000 bond issue costs. It also paid P40,000 in related
costs and P30,000 indirect costs of business combination.

Before the date of acquisition, Ariadne and Turgo reported the following data:
Ariadne Turgo
Current assets 1,000,000 500,000
Non-current assets 2,000,000 1,000,000
Current liabilities 200,000 400,000
Non-current liabilities 300,000 500,000
Ordinary shares 500,000 200,000
Share premium 1,200,000 300,000
Retained earnings 800,000 100,000

At the time of acquisition, Ariadne's current assets had a fair value of P1,200,000, while Turgo's non-current
assets had a fair value of P1,300,000. On the same date, the current liabilities of Turgo have fair value of
P600,000 while the non-current liabilities of Ariadne have a fair value of P500,000.

Required:
1. Determine the goodwill or gain on bargain purchase from the above transaction.

2. Give the adjusting entries that will be made on the book of Ariadne

3. Prepare the SFP of Ariadne after the merger.

Rubric for grading the computation:


CRITERIA POINTS
Complete solution with the correct answer 5
Half of the solution is correct 3
The first major step of the solution is correct 1

Rubric for grading the journal entries:


CRITERIA POINTS
Complete and correct accounts with correct amounts 5
Incomplete but correct accounts with correct amounts 3

02 Quiz 1 *Property of STI


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