Accounts payable P 288000 Other liabilities 408000 Notes payable 180000

Accounts payable p 288000 other liabilities 408000

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Accounts payable P 288,000 Other liabilities 408,000 Notes payable 180,000 Estimated liability for contingent consideration 36,000 Total Liabilities P 912,000 Stockholders’ Equity Common stock, P10 par P 1,020,000 Paid-in capital in excess of par 1 657,600
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Retained earnings 2 158,400 Total Stockholders’ Equity P1,836,00 0 Total Liabilities and Stockholders’ Equity P2,748,00 0 1 P240,000 + P446,400 – P32,400 2 P264,000 - P78,000 – P27,600 It should be noted that under PFRS 3, in-process R&D is measured and recorded at fair value as an asset on the acquisition date. This requirement does not extend to R&D in contexts other than business combinations. 2. a. Assets that have been provisionally recorded as of the acquisition date are retrospectively adjusted in value during the measurement period for new information that clarifies the acquisition-date value. The adjustments affect goodwill since the measurement period is still within one year (i.e., eight months) from the acquisition date. Therefore, the goodwill to be reported then on the acquisition should be P78,000 (P102,000 – P24,000). b. Buildings 24,000 Goodwill 24,000 Adjustment to goodwill due to measurement date. 3. a. The goodwill to be reported then on the acquisition should be P126,000 (P102,000 + P24,000). b. The adjustment is still within the measurement period, the entry to adjust the liability would be: Goodwill 24,000 Estimated liability for contingent consideration 24,000
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Adjustment to goodwill due to measurement date. c. c.1. The goodwill remains at P126,000, since the change of estimate should be done only once (last August 31, 20x5). c.2. On November 1, 20x5, the probability value of the contingent consideration amounted to P48,000, the entry to adjust the liability would be: Estimated liability for contingent consideration 12,000 Gain on estimated contingent consideration 12,000 Adjustment after measurement date. In this case, the m easurement period ends at the earlier of: one year from the acquisition date, or the date when the acquirer receives needed information about facts and circumstances (or learns that the information is unobtainable) to consummate the acquisition. c.3. c.3.1. The goodwill remains at P126,000, since the change of estimate should be done only once (last August 31, 20x5). c.3.2. On December 15, 20x5, the entry would be: Loss on estimated liability contingent consideration 30,000 Estimated liability for contingent consideration 30,000 Adjustment after measurement date. c.3.3. c.3.3.1. P126,000.
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c.3.3.2. On January 1, 20x7, Saul’s average income in 20x5 is P270,000 and 20x6 is P260,000, which means that the target is met, Peter Corporation will make the following entry: Estimated liability for contingent consideration 78,000 Loss on estimated contingent consideration 42,000 Cash 120,000 Settlement of contingent consideration. 4 . a.The amount of goodwill on acquisition will be recomputed as follows: Consideration transferred; Common shares: 30,000 shares x P25 P 750,000 Notes payable 180,000 Contingent consideration (cash contingency): P120,000 x 35% probability x (1/[1 + .04]*) 40,385 Total P 970,385 Less: Fair value of identifiable assets acquired and liabilities assumed (refer to 1a above) 864,000 Goodwill P 106,385 b. The journal entries by Pure Corporation to record the acquisition is as follows: Cash 24,000 Receivables – net 48,000
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