On April 27, 2020, Anak, Inc. paid P800,000 for the assets of Phawis Company. The recorded assets and liabilities of Phawis Company on April 27, 2020 following:

Cash                                                                                                     P160,000

Inventory                                                                                              480,000

Property and equipment (net of accumulated

  depreciation of P640,000)                                                          960,000

Liabilities                                                                                               360,000

On April 27, 2020 it was determined that the inventory of Phawis had a fair value of P380,000, and the property and equipment (net) had a fair value of P1,120,000. 

1. What is the amount of goodwill (income from acquisition) resulting from the business combination? _________. 

Problem 2

Statement of financial position reflecting uniform accounting procedures, as well as fair values that are to be used as basis of the combination are prepared on September 1, 20X0 as follows:

Plato                                     Bhaso                                   Thasa

Assets                                                  P5,250,000                         P6,800,000                         P900,000

                                                               ==========                      ==========                      ========

Liabilities                                             P3,950,000                         P2,650,000                         P530,000

Ordinary shares, all P10 par           1,700,000                           1,200,000                           275,000

Additional paid-in capital                                                                 500,000                           140,000

Retained earnings (deficit)            (400,000)                          2,450,000                           ( 45,000)

Total equities                                   P5,250,000                         P6,800,000                         P900,000

                                                               ==========                      ==========                      ========

Plato Company shares have a market value of P22 per share. Market values is not available for shares of Bhaso Co. and Thasa Co.

On September 1, 2020 Plato Company acquires all the assets and assumes the liabilities of Bhaso Co. and Thasa Co. by issuing 200,000 shares of its stock to Bhaso Co. and 29,000 shares of its stock to Thasa Co. Plato Company pays P10,000 for registering and issuing securities and P20,000 for other acquisition costs of combination.

2. What is the goodwill to be recorded by Plato Company on September 1, 2020? 

3. What is the total assets of Plato Company after combination?

4. What is the total stockholders' equity in the combined statement of financial position after the combination on September 1, 2020?

Answer rating: 100% (QA)

Problem 1 The total fair value of the identifiable net assets acquired by Anak Inc on April 27 2020 ... View the full answer