Question: Business Combination CONSOLIDATION AT ACQUISITION DATE (Cost Method) Assignment 01: The following are the balance sheet of P and S Co. when P decided to

Business Combination

CONSOLIDATION AT ACQUISITION DATE (Cost Method) Assignment 01: The following are the balance sheet of P and S Co. when P decided to acquire 4,500 shares of S: P Company S Company Cash P 850,000 P 50,000 Receivables 200,000 100,000 Inventories 600,000 200,000 Plant & Equipment 1,260,000 450,000 Total P2,910,000 P800,000 Liabilities P 300,000 P200,000 Share capital, par P100 2,000,000 500,000 Share premium 400,000 Retained earnings 210,000 100,000 Total P2,910,000 P800,000 Assume that P acquired the 4,500 shares of stocks of S by issuing 5,000 of its shares with a market value of P115.56 and on this date the market values of S inventories and PPE are P210,000 and P470,000 respectively. Prepare the following under Full Goodwill Method: 1. Regular journal entry to record the business combination transaction. 2. Working paper adjustment and elimination entry for consolidation purposes. 3. Consolidated working paper

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