On January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values
Question:
On January 1, 2022, Frank Co. and Richard, Inc. combined. As of this date, the fair values of the assets, liabilities, and equity of Frank and Richard before the business combination areas follows:
In the negotiation for the business combination, the acquirer incurred the following transaction costs: P45,000.00 for legal fees; P 5,000.00 for due diligence cost and P 80,000.00 for the general admin cost and cost of maintaining an internal acquisition department.
Case 1: before the transaction, Frank, Co. have 7,000 outstanding shares. Frank Co. Issued additional 10,000 shares as consideration for a 100% interest in Richard. Frank’s shares currently sell at P150 per share in the market, while Richard’s shares are quoted at P200 per share.
With the stated facts, answer the following:
4. How much is the Non-Controlling Interest in the acquiree?
a. P 0.00
b. P 150,000.00
c. P 310,000.00
d. P 500,000.00
5. How much is the previously held equity interest in the acquiree?
a. P 0.00
b. P 150,000.00
c. P 310,000.00
d. P 500,000.00
6. How much is the fair value of the net identifiable assets acquired?
a. P 1,965,000.00
b. P 1,010,000.00
c. P 1,310,000.00
d. P 1,190,000.00
Intermediate Accounting IFRS
ISBN: 9781119607519
4th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield