1. National acquired assets and liabilities of Regional for Regional’s bookvalue at the balance sheet date. At that date, National’s inventory had a book value and market value of P65,000 and P80,000, respectively while Regional’s inventory had a book and market value of P25,000 and P25,000, respectively. What amount of inventory would appear on the balance sheet?

2. Baker Enterprises acquired assets and liabilities assets and liabilities of Werner Company for Werner’s book value at the balance sheet date. At that date, Baker’s equipment had a net book value and market value ofP210,000 and P300,000, respectively while Werner’s equipment had a netbook and market value of P70,000 and P70,000, respectively. What amount of equipment (net) would appear on the balance sheet?

Use the following information for 3 to 6:

Platek Enterprises acquired assets and liabilities of Smith Company for P600,000. At that date, Smith Company had the following book values and market values:

 

3. What amount is included in the balance sheet with regard to inventory?

4. What amount is included in the balance sheet with regard to plant assets?

5. What amount is included in the balance sheet with regard to goodwill?

6. Cozzi Company is being purchased and has the following balance sheet as of the purchase date:

 

The price paid for Cozzi's net assets is P500,000. The fixed assets have a fair value of P220,000, and the liabilities have a fair value of P110,000.

The amount of goodwill to be recorded in the purchase is:

7. P Company purchased the net assets of S Company for P225,000. On the date of P's purchase, S Company had no investments in market able securities and P30,000 (book and fair value) of liabilities. The fair values of S Company's assets, when acquired were:

Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P120,000

Transcribed Image Text:

Cash and Receivables Inventory Plant Assets (net) Current Liabilities Long-term Debt Common Stock Retained Earnings Book Value P25,000 125,000 300,000 (60,000) (120,000) (15,000) (255,000) Market Value P25,000 180,000 475,000 (60,000) (120,000) Current assets Fixed assets P200,000 Liabilities. 180.000 Equity. P 90,000 290,000 Cash and Receivables Inventory Plant Assets (net) Current Liabilities Long-term Debt Common Stock Retained Earnings Book Value P25,000 125,000 300,000 (60,000) (120,000) (15,000) (255,000) Market Value P25,000 180,000 475,000 (60,000) (120,000) Current assets Fixed assets P200,000 Liabilities. 180.000 Equity. P 90,000 290,000

Answer rating: 100% (QA)

As per the accounting standards inventories are valued at cost or net realizable value which ever is lower whereas fixed assets or long term assets ar... View the full answer