CHAPTER 14 - CHAPTER 14 MULTIPLE CHOICE 14-1: a Purchase...

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CHAPTER 14 MULTIPLE CHOICE 14-1: a Purchase price (8,000 shares x P30) P240,000 Direct acquisition cost 4,000 Contingent consideration 5,000 Acquisition cost P249,000 14-2: a Purchase price P250,000 Direct acquisition cost 50,000 Acquisition cost P300,000 Less: Fair value of net assets acquired 180,000 Goodwill P120,000 14-3: c Purchase price (100,000 shares x P36) P3,600,000 Direct acquisition cost 100,000 Contingent consideration 20,000 Acquisition cost P3,720,000 14-4: b Purchase price (600,000 shares x P50) P30,000,000 Direct acquisition cost 300,000 Acquisition cost P30,300,000 Less: goodwill recorded 6,120,000 Fair value of net assets acquired P24,180,000 Capital stock issued (at par) P30,000,000 14-5: c Purchase price P2,550,000 Legal fees 25,000 Acquisition cost P2,575,000 Less: Fair value of net assets acquired Current assets P1,100,000 Plant assets 2,200,000 Liabilities ( 300,000) 3,000,000 Income from acquisition P( 425,000 ) 37
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14-6: a (at fair value at date of acquisition) 14-7: d Abel net income, January to December (P80,000 + P1,320,000) P1,400,000 Cain net income, April to December 400,000 Total net income P1,800,000 14-8: a Acquisition cost P 800,000 Less: Fair value of net assets acquired Cash P 160,000 Inventory 380,000 Property, plant and equipment 1,120,000 Liabilities ( 360,000) 1,300,000 Income from acquisition P (500,000) 14.9 a Acquisition cost P 700,000 Less: Fair value of net assets acquired (P600,000 – P188,000) 412,000 Goodwill P 288,000 Avon’s assets 2,000,000 Bell’s assets at fair value 600,000 Total assets P2,888,000 14-10: b Debit to Investment in Stock Broker’s fee P 50,000 Pre-acquisition audit fee 40,000 Legal fees for the combination 32,000 Total P 122,000 Debit to expenses : General administrative costs P 15,000 Other indirect costs 6,000 Total P 21,000 Debit to APIC Audit fee for SEC registration of stock issue P 46,000 SEC registration fee for stock issue 5,000 Total P 51,000 38
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14-11: d Acquisition costs: Cash P200,000 Stocks issued at fair value 330,000 Contingent liabilities 70,000 Total P600,000 Less: fair value of net assets acquired: Cash P40,000 Inventories 100,000 Other current assets 20,000 Plant assets (net) 180,000 Current liabilities (30,000) Other liabilities (40,000) 270,000 Goodwill P330,000 Total assets after combination: Total assets before combination P 760,000 Cash paid (200,000) Registration and issuance costs of shares issued ( 30,000) Polo’s assets after combination P 530,000 Assets acquired at fair values 340,000 Goodwill 330,000 Total assets after combination P1,200,000 14-12: d Acquisition cost P1,400,000 Less: Fair value net assets acquired 1,350,000 Goodwill P 50,000 14-13: a Acquisition cost P160,000 Less: Fair value of net identifiable assets acquired: Current assets P 80,000 Non-current assets 120,000 Liabilities ( 20,000) 180,000 Income from acquisition P(20,000) Non- current assets P120,000 14-14: c Acquisition cost P600,000 Less: Fair value of identifiable assets acquired: Cash P 60,000 Merchandise inventory 142,500 Plant assets (net) 420,000 Liabilities (135,000) 487,500 Goodwill P112,500 39
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14-15: b Acquisition cost P1,000,000 Less: Fair value of identifiable assets acquired 800,000 Goodwill P 200,000 MM’s net assets at book value 1,200,000 PP’s net assets at fair value 800,000 Total assets after combination P2,200,000 14-16: c, Under the purchase method assets are recorded at their fair values (P225.000) 14-17: d Capital stock issued at par (10,000 shares x P10) P100,000 APIC (10,000 shares x P40) 400,000 Total P500,000 14-18: d, net assets are recorded at their fair values.
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CHAPTER 14 - CHAPTER 14 MULTIPLE CHOICE 14-1: a Purchase...

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