XYZ Company merged into UUU Company on July 1, 2021. In exchange for the net assets at fair market value of XYZ Company amounting to P696,450, UUU, issued 68,000 ordinary shares at P9 par value with a market price of P12 per share. Out-of-pockets of the combination were as follows: Legal fees for the contract of business combination P35,600 Audit fee for SEC registration of stock issue P90,000 Printing costs of stock certificates P14,500 Broker's fee P23,600 Accountant's fee for pre-acquisition P80,000 Other indirect cost of acquisition P75,000 General and allocated expenses P43,000 Listing fees in issuing new shares P36,000 XYZ will pay an additional cash consideration of P455,000 in the event that UUU's net income will be equal or greater than P950,000 for the period ended December 31, 2021. At acquisition date, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be P195,000. Actual net income for the period ended December 31, 2021 amounted to P1,250,000. The additional cash consideration was paid. Compute the amount of goodwill to be recognized in the statement of financial position as of December 31, 2021?

XYZ Company merged into UUU Company on July 1, 2021. In exchange for the net assets at fair market value of XYZ Company amounting to P696,450, UUU, issued 68,000 ordinary shares at P9 par value with a market price of P12 per share. Out-of-pockets of the combination were as follows: Legal fees for the contract of business combination P35,600 Audit fee for SEC registration of stock issue P90,000 Printing costs of stock certificates P14,500 Broker's fee P23,600 Accountant's fee for pre-acquisition P80,000 Other indirect cost of acquisition P75,000 General and allocated expenses P43,000 Listing fees in issuing new shares P36,000 XYZ will pay an additional cash consideration of P455,000 in the event that UUU's net income will be equal or greater than P950,000 for the period ended December 31, 2021. At acquisition date, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be P195,000. Actual net income for the period ended December 31, 2021 amounted to P1,250,000. The additional cash consideration was paid. Compute the amount of goodwill to be recognized in the statement of financial position as of December 31, 2021?

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 22PC

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XYZ Company merged into UUU Company on July 1, 2021. In exchange for the netassets at fair market value of XYZ Company amounting to P696,450, UUU, issued68,000 ordinary shares at P9 par value with a market price of P12 per share. Outof-pockets of the combination were as follows: Legal fees for the contract ofbusiness combination P35,600; Audit fee for SEC registration of stock issueP90,000; Printing costs of stock certificates P14,500; Broker’s fee P23,600;Accountant’s fee for pre-acquisition P80,000; Other indirect cost of acquisitionP75,000; General and allocated expenses P43,000 and Listing fees in issuingnew shares P36,000. XYZ will pay an additional cash consideration of P455,000in the event that UUU’s net income will be equal or greater than P950,000 for theperiod ended December 31, 2021. At acquisition date, there is a high probabilityof reaching the target net income and the fair value of the additionalconsideration was determined to be P195,000. Actual net income for the…
XYZ Company merged into UUU Company on July 1, 2021. In exchange for the net assets at fair market value of XYZ Company amounting to P696,450, UUU, issued 68,00o0 ordinary shares at P9 par value with a market price of Pi2 per share. Out-of-pockets of the combination were as follows: Legal fees for the contract of business combination P35,600 Audit fee for SEC registration of stock issue P90,000 Printing costs of stock certificates P14,500 Broker's fee P23,600 Accountant's fee for pre-acquisition P80,000 Other indirect cost of acquisition P75,000 General and allocated expenses P43,000 Listing fees in issuing new shares P36,000 XYZ will pay an additional cash consideration of P455,000 in the event that UUU's net income will be equal or greater than P950,000 for the period ended December 31, 2021. At acquisition date, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be P195,000. Actual net income for the…
XYZ Company merged into UUU Company on July 1, 2021. In exchange for the net assets at fair market value of XYZ Company amounting to P696,450, UUU, issued 68,000 ordinary shares at P9 par value with a market price of P12 per share. Out-of-pockets of the combination were as follows: Legal fees for the contract of business combination P35,600; Audit fee for SEC registration of stock issue P90,000; Printing costs of stock certificates P14,500; Broker’s fee P23,600; Accountant’s fee for pre-acquisition P80,000; Other indirect cost of acquisition P75,000; General and allocated expenses P43,000 and Listing fees in issuing new shares P36,000. XYZ will pay an additional cash consideration of P455,000 in the event that UUU’s net income will be equal or greater than P950,000 for the period ended December 31, 2021. At acquisition date, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be P195,000. Actual net income…
CARBS Company merged into CREATIN Company on July 1, 2021. In exchange for the net assets at fair market value of CARBS Company amounting to P696,450, CREATIN, issued 68,000 ordinary shares at P9 par value with a market price of P12 per share. Out-of-pockets of the combination were as follows: Legal fees for the contract of business combination P35,600; Audit fee for SEC registration of stock issue P90,000; Printing costs of stock certificates P14,500; Broker’s fee P23,600; Accountant’s fee for pre-acquisition P80,000; Other indirect cost of acquisition P75,000; General and allocated expenses P43,000 and Listing fees in issuing new shares P36,000. CARBS will pay an additional cash consideration of P455,000 in the event that CREATIN’s net income will be equal or greater than P950,000 for the period ended December 31, 2021. At acquisition date, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be P195,000.…
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XENON Company merged into URANIUM Company on July 1, 2021. In exchange for the net assets at fair market value of XENON Company amounting to P696,450, URANIUM, issued 68,000 ordinary shares at P9 par value with a market price of P12 per share. Out-of-pockets of the combination were as follows: Legal fees for the contract of business combination P35,600; Audit fee for SEC registration of stock issue P90,000; Printing costs of stock certificates P14,500; Broker’s fee P23,600; Accountant’s fee for pre-acquisition P80,000; Other indirect cost of acquisition P75,000; General and allocated expenses P43,000; Listing fees in issuing new shares P36,000. XENON will pay an additional cash consideration of P455,000 in the event that URANIUM’s net income will be equal or greater than P950,000 for the period ended December 31, 2021. At acquisition date, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be P195,000.…
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On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado Ltd. The costs of issuing the shares by Quick Buck Ltd cost $1,600. At this date the statement of financial position of Eldorado Ltd was as follows: Carrying amount Fair value Machinery $40,000 S67,000 Fixtures & fittings 60,000 68,000 Vehicles 35,000 35,000 Current assets 10,000 12,000 Current liabilities (16,000) (18,000) Total net assets S129,000 Share capital (80,000 shares at $1.00 per share) $80,000 General reserve 20,000 Retained earnings 29,000 Total equity $129,000 Required: Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition.
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TWICE Company acquired BTS Company on February 6, 2022. The following out of pocket costs of the combination are as follows:Legal fees for business combination contract- P174,700Audit fees for SEC registration of share issue- 198,400Printing cost of stock certificates- 144,900Broker's fee- 135,000Accountant's fee for pre-acquisition audit- 161,000Other direct cost of acquisition- 90,400General and allocated expenses- 115,300Stock exchange listing fees in issuing shares- 172,000What is the amount of expense to be recognized in the Statement of Comprehensive Income for the year 2022?
On October 1, 2017, Alpha Company is interested in the business of Beta Company. Negotiations have been done and on January 3, 2018, an agreement was reached and the net assets with a fair value of P6,000,000 were exchanged on this date for the following:100,000 shares in Alpha Company, par P10, market value, P25P4,000,000 cash, half to be paid on date of exchange and the other payable in semi-annual installments of P500,000 beginning June 30, 2018. (assume a market rate of interest of 12% and round off present value factor to three decimal places)Non-cash assets, book value of P200,000, fair market value of P240,000 In issuing the equity instruments, Alpha Company incurred the following: -underwriting cots and brokerage fees, P20,000 -transaction costs such as stamp duties and professional advisers fee, P5,000.Legal and accounting fees related with the business combination, P30,000.Determine the amount of Goodwill.