PHIL AND SILL COMPANY

The consolidation elimination working paper at August 1, 2010 for the consolidated statement of financial position of Phil Corp
Corp., acquired the outstanding share capital of Sill Company. The acquisition has made Phil Corp. to exercise control over Sil

Ordinary share capital, Php 2 par

Paid in capital in excess of par
Retained earnings
Other comprehensive income
Inventories
Accumulated depreciation- Building
Building
Accumulated depreciation- Equipment
Patent
Goodwill
Equipment
Discount on bonds payable
Treasury shares, Php 2 per share
Investment in Sill
Non-controlling interest

What was the allocated excess attributable to the non-controlling interest in August 31, 2010, in the consolidated financial state
a. 296,667
c. 56,667
d. 141,667
d. 118,667
How many outstanding share capital of the subsidiary was acquired by the Phil Company?
a. 50,000
b. 30,000
c. 35,000
d. 32,500

What is the total fair value of the subsidiary (Sill Company) as of acquisition date?
a. 680,000
b. 595,000
c. 736,667
d. 740,000
BATS INC. - II Inc. & JJ Inc.
Bats, Inc., a new corporation formed and organized because of the recent consolidation of II Inc and JJ Inc, shall issue 10% par
contributions, and commons shares with a par value of Php 50 for the difference between the totalshares to be issued and the pr
equivalent to average annual earnings capitalized at 10%. Relevant data on II and JJ follows:

Total assets
Total liabilities
Annual earnings (average)

The total preference shares to be issued and the amount of goodwill to be recognized by Bats are:
a. 8,640 and Php 288,000, respectively.
b. 5,760 and Php 288,000, respectively
c. 2,880 and Php 864,000, respectively
d. 7,280 and Php864,000, respectively.

ZYXEL CORPORATION & GLOBE TATTOO

Zyxel Corporation acquired all net assets and liabilities of Globe Tattoo Corporation by issuing shares of its common stock on J
combination (at book values) and immediately following the combination is provided:

Zyxel
Cash 65,000
Accoutns Receivable 72,000
Inventory 33,000
Buildings and equipment (net) 400,000
Goodwill
Total assets 570,000

Accounts payable 50,000

Bonds payable 250,000
Common stock, Php 2 par 100,000
Paid in capital in excess of par 65,000
Retained earnings 105,000
Total liabilities and equities 570,000

Based on th above mentioned information answer the following questions:

What amount of goodwill will be reported by the combined entity immediately following the combination?
a. 13,000
b. 125,000
c. 173,000
d. 413,000

At what price was Zyxel stock trading when stock was issued for this acquisition?
a. 2.00
b. 5.63
c. 6.00
d. 8.00

What was the fair value of the net asset held by Globe Tatto a the date of combination?
a. 115,000
b. 227,000 352-125
c. 270,000
d. 497,000

What balance in retaiend earnings will th ecombined entity report immediately following the combination?
a. 35,000
b. 70,000
c. 105,000
d. 175,000

What number of shares did Zyxel issue for this acquisition? (may Php to pero number of shares hinihingi :<)
a. 80,000
b. 50,000
c. 30,000
d. 175,000

PINK CONRAD

On January 1, 2015, the fair values of Pink Conrad's net assets were as follows:

Current assets 100,000

Equipment 150,000
Land 50,000
Buildings 300,000
Liabilities 80,000
Total assets 680,000
On January 1, 2015, Blue George Company purchase the net assets of the Pink Conrad Company by issuing 100,000 shares of i
further agreed that Blue George would pay an additional amount on January 1, 2017, if the average income during the 2 year pe
consideration was calculated as Php 184,000, the measurement period is one year.

Based on the data of Pink and Blue, assuming that on August 1, 2015, the contingent consideration happens to be Php 170,000,

a. zero
b. 86,000
c. 166,000
d. 270,000

Based on the data of Pink and Blue, assuming that on August 1, 2015, the contingent consideration happens to be Php 170,000,

a. Estimated liability for contingent consideration

Loss on estimated contingent consideration
Cash

b. Estimated liability for contingent consideration

Cash

c. Estimated liability for contingent consideration

Gainon estimated contingent consideration
Cash

d. No entry required.

Based on the data of Pink and Blue, what amount will be recorded as goodwill on January 1, 2015?
a. zero
b. 100,000
c. 180,000
d. 284,000

PAPI & PAPU CORPORATION

On December 31, 2018, Papi Corporation acquired all the assets and assumed all liabilities of Papu Corporation for a considera

Cash
Equipment, with book value of Php 290,000
Loans payable
Papi's own ordinary shares
Contingent Consideration

The fair value of Papu's asset and liability accounts are as follows

Current
Assets 200,000
Liabilities 24,800

Answe the following independent assumptions:

Assume that Papus land has a provisianal value of Php 500,000 and was discovered thath on June 1, 2019, the fair value of the
goodwill or bargain purchase gain?

a. 170,800
b. 190,800 kasi nagrecord ka ng goodwill as of acqui date on dec 31, 2018, not on june 1 2019
c. 210,800
d. 150,800

Assume Papi has a total assets prior to businss combination of Php 2,500,000 and Papu's building has a provisional value of
480,00. How much is adjusted total assets of th
a. 3,190,000
b. 3,180,000
c. 3,210,000
d. 3,510,000

BEBE KO & MY BABY LOVE

Bebe Ko, a domestic corporation, acquired My Baby owning 60% of the latter's outstanding ordinary shares. Assume that the b
statement of financial position prior to business combination are as follows:
Accounts Bebe Ko
Cash 700,000
Noncash current assets 500,000
Noncurrent assets 5,000,000
Current liabilities 150,000
Noncurrent liabilities 800,000
Contributed capital 4,000,000
Retained earnings 1,250,000

Bebe Ko issued its ordinary shares to the former owners of My Baby Love with a fair value of Php 1,710,000. Acquisition relat
Php 30,000 share issuance cost. How much is the consolidated shareholder's equity at acquisition date?
Bebe Ko issued its ordinary shares to the former owners of My Baby Love with a fair value of Php 1,710,000. Acquisition relat
Php 30,000 share issuance cost. How much is the consolidated shareholder's equity at acquisition date?

a. 8,000,000 8,050,000
b. 8,050,000
c. 8,080,000
d. 8,070,000

Noncontrolling interest has a fair value of Php 1,180,000 and control premium amounted to Php 150,000. How much cash shou
of the consideration include Bebe Ko's ordinary shares with a fair value of Php 1,500,000.
a. 420,000
b. 270,000
c. 1,450,000
d. 170,000

Bebe Ko issued its ordinary shares to the former owners of My Baby Love with a fair value of Php 1,650,000. How much is the
a. 8,000,000
b. 7,900,000 8,000,000
c. 5,250,000
d. 5,650,000

BOY GEORGE & GIRL CONRAD

The Boy George Company acquired the net assets of the Girl Conrad Company on January 1, 2015, and made the following ent

Current assets 100,000

Equipment 150,000
Land 50,000
Buildings 300,000
Goodwill 100,000
Liabilities
Common stock, Php 1 par
Paid-in capital in excess of par

Assuming that additional shares on January 1, 2017 would be issued on that date to compensate for any fall in the value of Boy
would be to cure the deficiency by issuing added shares based on their fair value on January 1, 2017. The fair price on January

What is the additional number of shares issued on January 1, 2017 to compensate for any fall in the value of the stock?
a. 160,000
b. 100,000
c. 60,000
d. 10,000

What is the amount of paid-in capital in excess of par January 1, 2017 immediately after the additional shares were issued?
a. 520,000
b. 460,000
c. 420,000
d. No effect

CLIEN COMPANY & RENN CORP.

On June 1, 2016, Cline Company paid Php 800,000 cash for the assets and liabilities of Renn Corp. The carrying values of Ren
BV
Cash 150,000
Accounts receivable 180,000
Capitalizable software costs 320,000
Goodwill 100,000
Liabilities (130,000)
Net Assets 620,000

On June 1, 2016, Renn's account receivable had a fair value of Php 140,000. Additionally, Renn's in process and development c
items were stated at their fair values. On Cline's June 1, balance sheet, how much is reported for goodwill?
a. 320,000
b. 120,000
c. 80,000
d. 20,000

BRANCH'S WAREHOUSE DAMAGED BY

On December 30 of the current year, the home office of Took Mall has a shipment in transit costing Php 10,000 plus 20% mark
damaged by fire, destroying 60% of the inventory. The branch has a costs of goods available for sale of Php 370,000 prior to th
is as follow:

Sales 393,000
Sales allowances 2,500
Sales returns 3,000
If the branch sells the goods at billed price plus 30% markup, how much is the branch's inventory balance as of December 31?
a. 40,000
b. 38,000
c. 28,000
d. 41,000

PITA & SODA COMPANY

Pita Company acquires a controlling interest in Soda Company in the open market for Php 72,000. The 100 par value capital sto
earnings amounts to Php 30,000. The market value per share of Soda Company is Php 120 per share. In the consolidated statem
would show a balance of-

a. 24,000
b. 21,000
c. 10,500
d. 18,000

HOME OFFICE AND ITS BRANCH

The home office and its branch reported the following amounts:
invt in branch
Home Office
Total assets, net 500,000
Total liabilities 30,000
Revenues 120,000
Cost and expenses 80,000

The realized mark-up on branch inventory amounted to Php 14,000, while ending balance of unrealized mark-up on branch inve

How much is the opening balance of the investment in branch account in the following year?
a. 100,000
b. 120,000
c. 98,500
d. 154,000

How much is the combined net income?

a. 40,000
b. 60,000
c. 74,000
d. 75,500

How much is the equity in the combined financial satements?

a. 430,000
b. 490,000
c. 544,000
d. 588,500

HOME OFFICE AND ITS BRANCH

The home office and its branch reported the following amounts:

Home Office
Sales 200,000
Cost of sales 60,000
Expenses 80,000
Ending Inventory 12,000

1/3 of the cost of ending branch inventory, in the point of view of home office, is acquired from home office. The ending inven
of goods sold per GAAP were acquired from home office.

How much is the cost of goods sold in the combined income statement?
a. 90,000
b. 94,350
c. 94,500
d. 92,850

The combined cost of goods available for sale amounted to

a. 103,650
b. 108,000
c. 108,150
d. 103,500

GANDA KO & GANDA KORIN

Ganda Ko acquired all the assets and assumed all the liabilities of Ganda Korin for a total consideration consisting of the follow

Cash
10,000 of Papi's own ordinary shares, Php 10 par
Contingent consideration- Ganda Ko's share of stock
Equipment, with a book value of Php 900,000
Bonds payable, Php 500,000 face value

Acquisition related cost are as follows

Share issuance cost

Bond issue cost
Finder's fee
Accounting and legal fees

The fair value of net assets of Ganda Korin amounted to Php5,000,000

What is the total effect of the acquisition on the contributed capital of Ganda ko?
a. 2,160,000 increase
b. 2,000,000 increase
c. 1,960,000 increase
d. 1,800,000 increase

What is the total effect of the acquisiton on the retained earnings f Ganda Ko?
a. 170,000 decrease
b. 150,000 decrease
c. 150,000 increase
d. 170,000 decrease

VENTURES CORPORATION

The Ventures Corporation decided to open a branc store in Manila.S hipments of merchandise to the branch totaled Php 32,400
are to be kept at the home office. The branch submitted the following report summarizing its operations for the period ended De

Sales on account
Sales on cash basis
Collection accounts
Expenses paid
Expenses unpair
Purchase of merchandise for cash
Inventory on hand, December 31 (80% from home office)
Remittances to home office
What is the adjusted balance of the allowance for overvaluationof branch inventory account?
a. 2,400
b. 5,400
c. 3,600
d. None of the choices

How much is the ending inventory at cost?

a. 12,000
b. 15,000
c. 15,600
d. None of the choices

KIM COMPANY & JENNA COMPANY

On June 10,2013, Kim Company purchases 8,000 shares of Jenna Company for Php 80 pershare. Just prior to the purchase, Jen

Assets fv bv
Cash 20,000
inventory 400000 280,000
Equipment 500000 400,000
Goodwill 100,000
Total 800,000

On June 10, 2013, Jenna's inventory has a fair value of Php 400,000 and the equipemnt is worth Php 500,000.

What is the amount of goodwill to be reported in the consolidated statement of financial position on the date of acquisition?
a. 330,000
b. 28,800
c. 450,000
d. 288,000

What is the amount of non- controlling interest in the consolidated statement of financial position on the date of acquisition?
a. 330,000
b. 360,000
c. 640,000
d. 230,400

How many shares of Jenna's outstanding shares were owned by the non-controlling interest?
a. 4,500
b. 7,000
c. 5,000
d. 2,500

ZEALBY DORA COMPANY

Zelby Dora Company operates retail hobby shops from the main stock and a branch store. Merchandise is shipped from the mai
10% mark up. Trial balances of the main store and branch as of December 31, 20x5 are as follows:

Debits Main store

Cash 1,200
Accounts Receivable- net 160
Inventory- December 31, 20x4 2,800
Building- net 48,000
Equipment- net 24,000
Branch store 25,840
Purchases 192,000
Shipments from home office -
Other expenses 12,000
Total debits 306,000

Credits
Accounts payable 12,000
Unrealized inventory profit 7,360
Maint store -
Capital stock 40,000
Retained earnings 12,800
Sales 160,000
Shipments to branch 72,000
Profit from branch 1,840
Total credits 306,000

Inventories on hand at December 31, 20x5 at the main store and branch are Php 2,400 and Php 1,440, respectively. The Decemb
outsiders of Php 240, and the December 31, 20x5 branch inventory includes Php 120 of merchandise purchase from outsiders.

Based on the same data of Zealby Dora, the combined cost of goods sold amounted to
a. 208,960
b. 201,760
c. 194,520
d. 201,720

Based on the same data of Zealby Dora, the consolidated total assets would amount to
a. 101,880
b. 128,800
c. 102,000
d. 94,640

Based on the same data of Zealby Dora, the total assets of Main store in its separate financial statement is
a. 101,600
b. 101,480
c. 94,240
d. 94,640

Based on the same data of Zealby Dora, the consolidated cost of goods avaialble for sale is
a. 205,440
b. 205,360
c. 212,560
d. 212,800

Based on the same data of Zealby Dora, the consolidated total equity would amount to-
a. 52,800
b. 80,400
c. 82,240
d. 89,480

W Company

The W Company has these accounts at the time it wwas acquired by Bush Co:
bv
Cash 36,000
Accounts receivable 457,000
Inventories 120,000
Plant, property and equipment 696,400
Accounts payable 350,800

Bush Co. paid Php1,400,000 for net assets of W Company. It was determined that fair market values of inventories and plant, p

An assumed contingent liabilitity arising from past events with a fair valur amounting to Php 10,000 and such amount is consid
In the boooks or Busch Co, this transactionr esulted in:
a. Goodwill recorded at Php 441,400
b. Goodwill recorded at Php 224,800
c. Goodwill recorded at Php 234,800
d. Current assets increased by Php 234,800

HOME OFFICE AND ITS BRANCH

The home office and its branch reported the following amounts:
Home Office
Cost of goods available for sale 245,000
Purchases 250,000
Beginning inventory, acquired from outside supplier 10,000

How much is the mark-up on branch's beginning inventory?

a. 700
b. 800
c. 2,000
d. 1,000

MANILA COMPANY & MAKATI COMPA

All the issued and outstanding common stock of Manila Company were bought by Makati Company on October 1, 2016 for Ph

Cash
Accounts receivable (net of Php 25,000 allownance for doubtful accounts)
Inventory
Property and equipment (net of Php 100,000 allowance for depreciation)
Accoutns payable/ Notes payable

On Ooctober 1, 2016 the fair value fo the following assets were as follows:
Accounts receivable (net)
inventory
Property & equipment (net)

There is unrecorded warranty liability on prior product sales estimated Php 20,000 discounted cash flows based on estimated fu

Using the same information of Manila and Makati, the amount of goodwill as a result of the business combination should be
a. -
b. 35,000
c. 65,000
d. 100,000

Using the same information of Manila and Makati, the amount of goodwill recorded in the books of Makati Co as a result in the
a. - goodwill does not appear on the books of acquirer during stock acquisition, pag asset acqui it
b. 35,000
c. 65,000
d. 100,000

THE ALLOWANCE FOR BRANCH PROFIT INV

The allowance for branch profit inventory overvaluation has decrease by Php 400. Mark-up on shipments of merchandise to br
amounted to Php 360,000, 25% of which remain unsold at year-end which is 20% higher compared to last year. The branch also
inventory beginning from outside purchase amounted to Php 31,000, the ending inventory to appear in the consolidated financia

a. 67,000
b. 75,000
c. 86,400
d. 90,000

The allowance for branch inventory overvaluation has a beginning and ending balance of Php 20,000 and hp 18,000. Current sh
shipments are billed with a mark-up of 20%. The realized gross profit from the sale of branch inventory will be debited to allow
a. 26,000
b. 30,800
c. 22,000
d. 26,800

THE HOME OFFICE REPORTED THE

The home office reported the following data during the current year:

Home Office
Sales 70,000
Beginning Inventory 1,500
Purchases 500,000
Shipments to branch 450,000
Shipments from home office -
Ending Inventory 5,000
Unrealized mark-up on branch inventory 92,000
Realized mark- up on branch inventory 86,000

How much is the ending inventory in the combined statement of financial position?
a. 55,000
b. 46,667
c. 49,000
d. 61,000

How much is the beginning inventory in the combined statement of financial position?
a. 21,500
b. 23,500
c. 13,500
d. 19,500

PURO CORPORATION AND SATO COMP

The statements of financial position for Puro Corporation and Sato Company on December 31, 2015 are given below:
Puro
Cash and cash equivalents 42,000
Inventory 60,000
Property and equipment (net) 300,000
Investment in Sato Company 156,000
Total assets 558,000

Currrent laibilities 108,000

Long-term liabilities 120,000
Common stock 180,000
Retained earnings 150,000
Total liabilities and shareholder's equity 558,000

Puro Corporation purchase 80% ownership of Sato Company on December 31, 2015 for Php 156,000. On that date, Sato Comp
than the book value shown, while its long-term liablities has a market value of Php 90,000. All othe rbook values approximated
December 31, 2015.
What amount of total property and equipment will be reported by Puro and Sato?
a. 300,000
b. 474,000
c. 450,000 480,000
d. 480,000

What amount of shareholder's equty will be reported by Puro at Sato?

a. 330,000
b. 369,000 369,000
c. 450,000
d. 480,000

What amount of consolidated retained earnings will be reported by Puro and Sati?
a. 150,000
b. 168,000
c. 222,000
d. 240,000

IN A STOCK ACQUISITION

In a stock acquisition, an acquired purchases 70% of the acquiree's outstanding ordinary shares with a control premium of Php
Php 650,000. How much is the goodwill under full goodwill approach?
a. 65,000
b. 80,000
c. 114,000
d. 50,000

PUZON, INC. & SANTOS COMPANY

Puzon, Inc. purchases 80% of Santos Company's outstanding common stock for Php 156,000, Php 36,000 above the underlying
approximated book value. On the December 31, 2015 consolidated statement of financial position, non- controlling interest (NC
a. 45,000
b. 25,200
c. 39,000
d. 36,000
 PALO COMPANY & SOTA COMPANY

On December 31, 2015, Pato Company paid Php 594,4000 FOR 99% of the outstanding common stock of Sota Company. The
the stock. Sota's net assets had a book value of Php 510,000 and a fair market value of Php 540,000 when it was acquired by Pa
should be reported at
a. 5,100
b. 5,400
c. 5,940
d. 6,000

IN A STOCK ACQUISITION

In a stock acquisiton, 30% were identified as non-controlling interest and its recorded at Php 270,000 under full goodwill. The
is Php 36,000 under full goodwill approach. The identifiable net assets of the acquiree have a fair value greater than its book va
difference between the fair value nd book value of the acquire''s net assets if the parentpaid not control premium?
a. 36,000
b. 51,840
c. 43,200
d. 54,000

AIR RICA COMPANY

On December 31, 2014, the Branch Current ledger account in the accounting records of the home office of Air Rica Company s

a. On December 31, 2014, merchandise billed at Php 5,800 was in transit from the home office to the branch. The periodic inve
b. The branch had collected home office tradeacconts receivables of Php 560, the homeoffice was not notified
c. On December 29, 2014, the home office hadmailed a check for Php 2,000 to the branch, but the accountant for the homd offi
d. Branch net income for December 30, 2013, was recorded erroenously by the home office at Php 840 instead Php 480. The cr
e. On December 28, 2014, the branch had return supplies costing Php 220 to the home office, the home office has not recorded
f. Acquisition of equipment by the branch, Php 1,500. The equipment account is to be maintained in the home office books. Th
g. A branch customer erroneously remitted Php1,000 to the home office. The homeoffice recorded this cash collectionon Decem

The unadjusted balance of the home office current account on the books of the branch as of December 31, 2014:
a. 53,180
b. 51,180
c. 49,180
d. 48,620

The adjusted balance of the reciprocal account on December 31, 2014:

a. 50,180
b. 54,480
c. 55,980
d. 56,980

BEBE KO & MY BABY LOVE 2

Bebe Ko, a domestic corporation acquired My Baby Love for 1,176,000 owning 70% of the latter's outstanding ordinary shares
How much is the goodwill or bargain purchase gain if the fair value of net assets of My Baby Love approximates book value, e
its book value, and equipment has a fair value higher Php 30,000 that it sbook value.
a. 280,000
b. 320,000
c. 270,000
d. 380,000

THE BRANCH REPORTED THE

The branch reported the followng:

Beginning inventory- home office 10,000

Purchases 80,000
Purchase discount 2,000
Shipments from home office 70,000
Freight in- home to branch 1,000
Freight in- supplier to branch 500

If 20% and 10% of the merchandise available for sale that is acquired from home office and from outside supplier, respectively
per branch book?
a. 64,800
b. 135,450
c. 139,050
d. 127,600
 GANDA CORPORATION & DARA COMP

On November 30, 2018, Ganda corporation assumed all assets and laibilities of Dara Company. The pre-combination trial balan

Ganda Book
Total assets 300,000
Total liabilities 30,000
Ordinary shares, Php 20 par 200,000
Share premium 10,000
Retained earnings (Deficit) 60,000

If Ganda paid cash of 1,000 loans payable, 6,000 and equipment with a fair value and book value of 13,000 and 15,000, respect
a. 8,800
b. 10,800
c. 2,500
d. 4,500

TILLMAN TEXTILE COMPANY

Tillman Textile Company has a single branch in Bulacan. On March 1, 20x4, the home office accounting records included an A
acount with a credit alance of Php 9,600. During March, merchandise costing Php 10,800 was shipped to the Bulacan Branch an
price.On March 31, 20x4, the branch prepared an income statement indication a net loss of Php 3,450 for March and ending inv
adjustment for Allowance for overvaluation of inventories to reflect the true branch net income?
a. 11,777.10 debit
b. 13,800.00 credit
c. 11,799.90 debit
d. 138,000.00 debit

THE FOLLOWING ARE THE TRANSACTI

The following are the transactions that occurred during the year:
- Home office shipped Php 100,000 cost of merchandise to the branch
- The branch returned to home office merchandise with a billed price of Php 13,200.
- The branch has cash sales of Php 75,000 during the year, and credit sales of Php 80,000.
- Total expenses of the branch amounted to Php 20,000.
- The branch reported a cost of sales of Php 99,000.
- Expenses include Php 2,000 depreciatio expense of fixed asset maintained in the home office's books.
All inventories of the branch are acquired from home office at 110% billed price. The investment in branch and home office ac
a. 98,000
b. 134,800
c. 107,800
d. 143,800

BEBE KO & MY BABY LOVE 3

Bebe Ko, a domestic corporaton acuired My Baby Love owning 60% of the latter'soutstanding ordinary share.s Book value of n
book values of each item of the acquiree's net assets are significanlty the same, except bonda payable whose premium on bonds
Php 20,000. I fthe acquisition resulted to goodwill under partial goodwill approach amounting to Php 78,000, how much should
a. 584,000
b. 540,000 FULL 584,000
c. 532,000 PARTIAL 532,000
d. 520,000

PINK INC & SING COMPANY

On December 31, 2013, the goodwill prsented in the consolidated statement of financial position after Pink Inc acquired for cas
5,000. Sing's assets and liabilities on that dat were as follows:

Cash
Inventory
Property and equipment (net of accumdep of P100,000)
Liabilities

On the day of business combination the fair value of the inventory was Php 125,000 and the fair value of the property and equip
a. 495,000
b. 500,000
c. 505,000
d. 490,000

BEBE KO & MY BABY LOVE 4

Bebe Ko, a domestic corporaton acuired My Baby Love owning 60% of the latter'soutstanding ordinary share.s Book value of n
partial goodwill approach amounted to Php 36,480, how much is the fair value of net assets of My Baby Love assuming it apro
Php 20,000 lower than its book value?
Bebe Ko, a domestic corporaton acuired My Baby Love owning 60% of the latter'soutstanding ordinary share.s Book value of n
partial goodwill approach amounted to Php 36,480, how much is the fair value of net assets of My Baby Love assuming it apro
Php 20,000 lower than its book value?
a. 1,350,000
b. 1,370,000 bv 1,350,000
c. 1,430,800 b/p 20,000
d. 858,480 fv of net assets 1,370,000

SUB INC. & PUB COMPANY

On the day of acquisition Sub Inc had the following assets and liabilities:
Bookvalue
Current assets 90,000
Plant assets (net) 198,000
Liabilities (36,000)

Pub Company paid Php 405,000 for the 90% of the outstanding voting stock of Sub. The paartial goodwill in the consolidated t
a. 162,000
b. 117,000
c. 145,800
d. 198,000

BROOKE CORPORATION

The Brooke Corporation has two branches, Branch P and Branch Q. The home office shipped Php 80,000 in merchandise to Bra
thereafter, Branch P was instrcuted to ship this merchandise to Brancg Q at a prepaid freight cost of Php 700. Freight charges fo
home office directly to Branch Q. Compute the excess freight on transfer of merchandise
a. 700
b. 800
c. 500
d. 400

JJ COMPANY
The JJ Company, inc opened an agency in makati 2016. The following is a summary of the transactions of th agency:

Sales order sent to homeoffice

Sales order filled by home office in 2016
Freight on shipment to agency
Collections, net of 2% discount
Selling expenses paid from the agency working fund
Administrative expenses charged to agency
Samples shipped to agency
Cost
 Inventory,D ecember 31, 2016
Advertising cost
The company mantains its gross margain on agency sales at 30% excluding the freight costs on shipment to agency.

The agency's cost of sales including freight and agency's net income would amount to, respectively:
a. 70,800;11,988
b. 95,040;15,336
c. 80,760;11,988
d. 80,760;14,640

ROSETTE CORPRATION

Roxette Corporation regularly ships merchandise to its Boracay branch with a markup on cost of 20%. During the current year,
with a cost of Php 20,000. the entry in the books of Boracay branch would include a
a. debit to home office current accoutn for 24,000
b. debit to shipments from home office account for 24,000
c. credit to shipment to branch account for 24,000
d. credit to investment in branch account for 24,000

BEBE KO & MY BABY LOVE 4

Bebe Ko, a domestic corporation acquired My Baby Love for Php 980,000 owning 70% of the latter's outstanding ordinary shar
How much is the goodwill (bargain purchase gain) if the fair value of net assets of My Baby Love is Php 1,350,000?
a. 50,000
b. (380,000)
c. (370,000)
d. 40,000

THE CONSIDERATION TRANSFERRE

The consideration transferred by the acquirer amounted to Php 790,000 for 70% and the fair value of subsidiary attributable to t
gain recorded under full goodwill is Php 5,000 with an excess for allocation attributable to parent for Php 160,000, what is the b
a. 5,000
b. 5,000
c. 15,000
d. 20,000
 PHIL AND SILL COMPANY

idated statement of financial position of Phil Corp. and Sill Company is shown below. As of the close of business that date, Phil.
n has made Phil Corp. to exercise control over Sill Company.

100,000 47,500
50,000 30,875.00
175,000
120,000
dr 90,000 under 90,000
cr 20,000 over 20,000
dr 10,000 under 10,000
cr 50,000 over 50,000
dr 35,000 under 35,000
85,000 (40,000)
dr 40,000 over (10,000)
dr 10,000 over 155,000
5,000
442,000 680,000 0.65 100,750.00
238,000 0.35 54,250.00
735,000 735,000
ugust 31, 2010, in the consolidated financial statements of Phil and Sill?

l Company?

CI 60,000
Ordinary capital 50,000 32,500 17,500 442,000
Treasury 2,500 2,500
30,000

BATS INC. - II Inc. & JJ Inc.

olidation of II Inc and JJ Inc, shall issue 10% participating preference shares with a part value of Php 100 for II and JJ net assets
ce between the totalshares to be issued and the preference shares to be issued. The total shares to be issued by Bats shall be
and JJ follows:
II JJ Pref Ord
720,000 921,600 2,880 3,456.0 4,608.0
432,000 345,600 5,760 2,304.0 6,912.0
46,080 69,120 8,640

gnized by Bats are:

YXEL CORPORATION & GLOBE TATTOO CORP.

oration by issuing shares of its common stock on January 1, 2011. Partial balance sheet data for the companies prior to the business
rovided:

Globe Consolidation
25,000 90,000
20,000 2,000 94,000
45,000 10,000 88,000
150,000 100,000 650,000
? 13,000
240,000 ?

25,000 75,000 75,000

100,000 350,000 350,000
25,000 (60,000) 160,000 160,000
20,000 (160,000) 245,000 245,000
70,000 ? 105,000
240,000 ? 935,000

y following the combination?

 acqui cost
bv of net ass
excess
net under
goodwill

y following the combination?

number of shares hinihingi :<)

PINK CONRAD
k Conrad Company by issuing 100,000 shares of its Php 1 par value stock when the fair value of the stock was Php 6.20. It was
, 2017, if the average income during the 2 year period of 2015-2016 exceeded Php 80,000 per year. The expected value of this
ear.

tingent consideration happens to be Php 170,000, what amount will then be recorded as goodwill on the said date?

tingent consideration happens to be Php 170,000, the entry should be:

170,000
5,000
175,000

175,000
175,000

184,000
9,000
175,000

l on January 1, 2015?

PAPI & PAPU CORPORATION

all liabilities of Papu Corporation for a consideration of PhP 1,680,000 which consist of the following:

700,000
300,000
200,000
400,000
 80,000

Noncurrent
1,500,000 20,000 1,720,000 1,680,000
186,000 210,800 1,489,200
1,509,200 190,800
20,000
170,800
vered thath on June 1, 2019, the fair value of the land as of acquisition date is Php 520,000, how much is the

qui date on dec 31, 2018, not on june 1 2019

00 and Papu's building has a provisional value of Php 500,000 and was discovered that on June 1, 2019, its fair value as of acquisition date
480,00. How much is adjusted total assets of the combined entity?

1,500,000
1,700,000
-20000
3180000
BEBE KO & MY BABY LOVE

's outstanding ordinary shares. Assume that the book value of net assets of the acquiree is approximately equal to its fair value. The

My Baby Love
240,000
300,000
2,500,000
90,000
480,000
2,400,000
250,000

h a fair value of Php 1,710,000. Acquisition related costs include accounting and legal expenses of Php 20,000, and
quity at acquisition date?
m amounted to Php 150,000. How much cash should Bebe Ko pay to the former shareholders of My Baby Love if part
p 1,500,000.

acqui cost
ord shares
cash

h a fair value of Php 1,650,000. How much is the consolidated shareholder's equity at acquisiton date?

BOY GEORGE & GIRL CONRAD

y on January 1, 2015, and made the following entry to record the purchase:

80,000
100,000
520,000

ate to compensate for any fall in the value of Boy George common stock below Php 16 per share. The settlement
ue on January 1, 2017. The fair price on January 1, 2017 was Php 10.

sate for any fall in the value of the stock?

 ately after the additional shares were issued?

CLIEN COMPANY & RENN CORP.

bilities of Renn Corp. The carrying values of Renn's assets and liabilities on June 1, 2016 follow:
FV Adjustment

140000 over (40,000)

P&D under 200,000

Additionally, Renn's in process and development costs was estimated to have a fair value of Php 200,000. All other
uch is reported for goodwill?
acqui cost
bv
excess
net under
goodwill
BRANCH'S WAREHOUSE DAMAGED BY FIRE

ment in transit costing Php 10,000 plus 20% markup. On December 28 of the same year, the branch's warehouse was
oods available for sale of Php 370,000 prior to the fire incident. The sales of the branch generated as of December 31
e branch's inventory balance as of December 31?

PITA & SODA COMPANY

arket for Php 72,000. The 100 par value capital stock of Soda Company at the date of acquisition and its retained
y is Php 120 per share. In the consolidated statement of financial position on the acquisition, non controlling interest

72000
60000
30,000 12000 18,000

HOME OFFICE AND ITS BRANCH

HOC
Branch
150,000
30,000
60,000
40,000

ing balance of unrealized mark-up on branch inventory amounted to Php 1,500.

ollowing year?
 HOME OFFICE AND ITS BRANCH

Branch
80,000
34,500
32,000
1,650

, is acquired from home office. The ending inventory in the combined financial statement showed of the branch's cost

GANDA KO & GANDA KORIN

n for a total consideration consisting of the following:

1,500,000
2,000,000 acqui cost 4,980,000
 200,000 fv of net assets 5000000
800,000 BPG (20,000)
480,000

40,000
24,000
30,000
40,000

2,000,000
200,000
(40,000)
2,160,000

BPG 20,000
fv adjustment (100,000)
acqui rel (70,000)
(150,000)

VENTURES CORPORATION

of merchandise to the branch totaled Php 32,4000, which included a 20% mark-up on cost. All accounting records
ummarizing its operations for the period ended December 31, 20x4

44,400
13,200
36,000
22,800
7,200
15,600
18,000
33,000
ntory account?

Ending Inventory 14400

Mark-up 2400
Cost per GAAP 12000

KIM COMPANY & JENNA COMPANY

or Php 80 pershare. Just prior to the purchase, Jenna Company has the following statement of financial position:

Liabilities and equity

Current liabilities 250,000
(120,000) Ordinary shares, Php 5 par 75,000
-100000 APIC 130,000
Retained earnings 370,000
Treasury shares, Php 10 cost (25,000)
Total 800,000

quipemnt is worth Php 500,000.

cash
f financial position on the date of acquisition? bv of na
excess
fv adj
goodwill

of financial position on the date of acquisition?

olling interest?
 ZEALBY DORA COMPANY

ranch store. Merchandise is shipped from the main store and to the branches and billed to the branch at an arbitrary
20x5 are as follows:

Branch
800
-
2,000
14,400
9,600
-
8,800
79,200
5,600
120,400

400
-
24,000
-
-
96,000
-
-
120,400

p 2,400 and Php 1,440, respectively. The December 31, 20x4 branch inventory includes merchandise purchased from
hp 120 of merchandise purchase from outsiders.
parate financial statement is

ble for sale is

W Company

fv

133000 (13,000)
900000 (203,600)

that fair market values of inventories and plant, property, and equipment were Php 133,000 and Php 900,000, respectively.

ounting to Php 10,000 and such amount is considered a reliable measurement

 1410000
958,600
451,400
(216,600)
234,800

HOME OFFICE AND ITS BRANCH

Branch Combined
34,300 272,500
10,000 260,000
500 12,500 (2,000)

MANILA COMPANY & MAKATI COMPANY

ht by Makati Company on October 1, 2016 for Php 700,000. The assets and liabilities of Manila Company were:
bv fv
50,000
250,000 235,000 15,000
150,000 130,000 20,000
300,000 400,000 (100,000)
130,000

235,000
130,000
400,000

,000 discounted cash flows based on estimated future cash flows.

a result of the business combination should be

 700000
620,000
80,000
(45,000)
35,000
corded in the books of Makati Co as a result in the business combination should be:
rer during stock acquisition, pag asset acqui it appears

E ALLOWANCE FOR BRANCH PROFIT INVENTORY

400. Mark-up on shipments of merchandise to branch is 10% on cost. The branch has cost of goods available for sale
20% higher compared to last year. The branch also acquire merchandise form outside supplier. If the branch's
ng inventory to appear in the consolidated financial statements would be

balance of Php 20,000 and hp 18,000. Current shipments during the year amounted to Php 144,000 at billed price. If
e sale of branch inventory will be debited to allowance for branch inventory valuationa t

THE HOME OFFICE REPORTED THE

Branch
600,000
 20,000
30,000
-
540,000
50,000

PURO CORPORATION AND SATO COMPANY

on December 31, 2015 are given below:

Sato
54,000
36,000
150,000

240,000

36,000
54,000
60,000
90,000
240,000

, 2015 for Php 156,000. On that date, Sato Company's property and equipment had a fair value of Php 30,000 more
Php 90,000. All othe rbook values approximated fair value. In the consolidated statement of financial position on
 0.8 0.2
acqui cost 156,000 39,000 195,000
bv 120,000 30,000 150,000
excess 36,000 9,000 45,000
fv 4,800 1,200 6,000
goodwill 40,800 10,200 51,000

IN A STOCK ACQUISITION

g ordinary shares with a control premium of Php 30,000. The goodwill recorded under partial goodwill approach is

control premium
acqui cost
goodwil

PUZON, INC. & SANTOS COMPANY

or Php 156,000, Php 36,000 above the underlying book value on January 2, 2015. The fair value of Santos' net assets
of financial position, non- controlling interest (NCI) shhould be reported at:
 PALO COMPANY & SOTA COMPANY

utstanding common stock of Sota Company. The remaining 1% was heldby a stockholder who was unwilling to sell
value of Php 540,000 when it was acquired by Palo. If Sota uses push down accounting, the non controllng interest

540000
0.01
5400.00000000001

IN A STOCK ACQUISITION

ecorded at Php 270,000 under full goodwill. The goodwill presente in the consolidated statement of financial position
acquiree have a fair value greater than its book value by 20%. What is the sahre of the non-controllign interest in the
he parentpaid not control premium?
acqui cost
fv of na
goodwill

AIR RICA COMPANY

ecords of the home office of Air Rica Company shows a debit alance of Php 55,500. You ascertained the following facts in analyzing the ac

m the home office to the branch. The periodic inventory system is used by both the home office and the branch.
the homeoffice was not notified
o the branch, but the accountant for the homd office had recorded the check as a debit to the Charitable Contribution Expense ledge account
e home office at Php 840 instead Php 480. The credit was recorded by the home office in the Branch Income Summary ledger account.
he home office, the home office has not recorded the receipt of the supplies. The holme office records acquisiton of supplies in the Office S
is to be maintained in the home office books. The homd office has not been notified of the acquisition.
homeoffice recorded this cash collectionon December 29, 2014. Meanwhile, back at the branch, no entry has been made yet.

e branch as of December 31, 2014:

 BEBE KO & MY BABY LOVE 2

ng 70% of the latter's outstanding ordinary shares. Book value of net assets acquired amounted to Php 1,350,000.
ets of My Baby Love approximates book value, except bonds payable, the fair value of such is Php 20,000, lower that
value.
acqui cost
bv of net assets
excess
net over(under)
goodwill (BPG)
THE BRANCH REPORTED THE

me office and from outside supplier, respectively, remain unsold as of year end, how much is the cost of goods sold
 GANDA CORPORATION & DARA COMPANY

f Dara Company. The pre-combination trial balances are as follows:

Fair Darak Book Fair

290,000 19,000 12,500 6,500
34,000 1,500 1,300 (200)
20,000
1,000
(3,500)

lue and book value of 13,000 and 15,000, respectively, how much is the goodwill of gain on bargain purchase gain?
acqui cost
bv of net assets
excess
net over
goodwil
TILLMAN TEXTILE COMPANY

the home office accounting records included an Allowance for Overvaluation of Inventories- Bulacan Branch ledge
Php 10,800 was shipped to the Bulacan Branch and billed at a price representing a 40% markup on the billed
a net loss of Php 3,450 for March and ending inventories at bille dprices of Php 7,500. What is the amount of
ranch net income?

THE FOLLOWING ARE THE TRANSACTIONS

INVT IN BRACH
beg 100000
int beg 110000
-13200
Php 80,000. (REMIT?) 75000
-18000
-99000
the home office's books. 154800
invt end 11000
 143800

ce. The investment in branch and home office accounts have an opening balance of hp 100,000 each. How much is the ending balance of i
56,800
20,000
47,000
11,000

BEBE KO & MY BABY LOVE 3

tter'soutstanding ordinary share.s Book value of net assets acquired amounted to Php 1,350,000. The fair values and
, except bonda payable whose premium on bonds curently recorded is lower than that of the fair value of bond sby
oach amounting to Php 78,000, how much should be the non controlling interest of My Baby Love?
acqui cost]
bv of net assets
excess
net under
goodwill (BPG)
PINK INC & SING COMPANY

f financial position after Pink Inc acquired for cash all the outstanding stock of Sing Company amounted to Php

BV FV Adjustment
60,000
150,000 125,000 over (25,000)
350,000 385,000 under 35,000
70,000
490,000
25,000 and the fair value of the property and equipment (net) was Php 385,000. The cash paid by Pink Inc from the acquisition amounts to:
acqui cost 505,000
bv of net assets 490,000
excess 15,000
net under 10,000
goodwill 5000
BEBE KO & MY BABY LOVE 4

tter'soutstanding ordinary share.s Book value of net assets acquired amounted to Php 1,350,000. If the goodwill under
e of net assets of My Baby Love assuming it aproximated book value, except bonds payable, the fair value of which is
 acqui cost
bv of net assets
0verstated by 20,000 excess
net over
goodwill
SUB INC. & PUB COMPANY

0.9
Fair value acqui cost 405000
90,000 bv of net assets 226,800
234,000 excess 178,200
(36,000) net under 32,400
Goodwill 145,800
f Sub. The paartial goodwill in the consolidated tatement of financial positiona t acquisition is

BROOKE CORPORATION

e office shipped Php 80,000 in merchandise to Branch P and prepaid the freight charges of Php 500. A short time
prepaid freight cost of Php 700. Freight charges for this merchandise normally cost Php 800 when shipped from the
erchandise

HO to P
P to Q
HO to Q
Total
JJ COMPANY
mmary of the transactions of th agency:

132,000 Sales
111,600 COGS
2,640 Gross Profit
95,256 97,161 Expenses
6,768 Net Income
5% of gross sales

7,200
 2,640
4,560
e freight costs on shipment to agency.

mount to, respectively:

ROSETTE CORPRATION

markup on cost of 20%. During the current year, the head offfic eof Rosette ships merchandise to Boracay branch
lude a
Shipments from home office
Home Office Current account

BEBE KO & MY BABY LOVE 4

ning 70% of the latter's outstanding ordinary shares. Book value of net aassets acquired amounted to Php 1,360,000.
ts of My Baby Love is Php 1,350,000?
acqui cost
bv
excess
net (over) under
goodwill (BPG)
THE CONSIDERATION TRANSFERRED

% and the fair value of subsidiary attributable to the non-controlling interest is Php 355,000. IF the bargain purchase
tributable to parent for Php 160,000, what is the bargain purchase gain under partial goodwill?
0.7
acqui cost 790000
bv 630000
excess 160000
net (over)under 175000
Goodwill(BPG) -15000
Full goodwill 5000
Partial 15000
usiness that date, Phil.

ELIMINATE THE SUBSIDIARY'S SHE

Ordinary share capital, Php 2 par
Paid in capital in excess of par
Retained earnings
Other comprehensive income
Treasury shares, Php 2 per share
Investment in Sill
Non-controlling interest

ADJUSTMENT TO FAIR VALUE

Inventories
Accumulated depreciation- Building
Building
Accumulated depreciation- Equipment
Patent
Equipment
Discount on bonds payable
Investment in Sill
Non-controlling interest

RECOGNITION OF GOODWILL
Goodwill
Investment in Sill
Non-controlling interest
35,000 95,000
238,000 680,000
for II and JJ net assets
by Bats shall be

nies prior to the business

240,000 8.00 30,000
115,000
125,000
112,000
13,000

Aug1,2015
620000
184000
 -14000
270,000
was Php 6.20. It was
pected value of this
s fair value as of acquisition date is Php

qual to its fair value. The

1770000 1180000 2950000
150000 150000
1920000
1500000
420000
 800000
520,000
280,000
160,000
120,000
15,000

(2,500)
12,500
8000 4,500 12,500
0.64 0.36
640000 360000 1,000,000.00
450,000
550,000
(220,000)
330,000
00, respectively.
 0.7 0.3
35000 15000 50000
30000 30000
65000 15000 80000
65000 15000 80000

0.8 0.2
156000 39000 195000
 0.7 0.3
630000 270000 900000
604,800.00 259,200 864,000.00
25,200.00 10,800.00 36,000

- 43,200.00

ollowing facts in analyzing the account:

ntribution Expense ledge accounts; the branch had not received the check as of December 31, 2014.
me Summary ledger account.
isiton of supplies in the Office Supplies ledger accont.

as been made yet.

equipment 30000 overstated
bonds payable 20000 understated

0.7 0.3
1176000 504000 1680000
945000 405000 1350000
231000 99000 330000
35000 15000 50000
266000 114000 380000
 goodwil 6,500
assets 6,500

liab 200
goodwill 200

20000
17,500
2,500
6,300
8,800

T IN BRACH
much is the ending balance of investment in branch account?

0.6 0.4
876000 584000 1460000
810000 540000 1350000
66000 44000 110000
-12000 -8000 -20000
78000 52000 130000

rom the acquisition amounts to:

 0.6 0.4
858480 572320 1430800
810000 540000 1350000
48480 32320 80800
12000 8000 20000
36480 24320 60800

0.1
45000 450000
25,200 252,000
19,800 198,000
3,600 36,000
16,200 162,000

Actual Direct Excess

500 Investment in Q branch
700 Excess Freight
800 Investment in P branch
1200 800 400
 24000
24000

0.7 0.3
980000 420000 1400000
952000 408000 1360000
28000 12000 40000
-7000 -3000 -10000
35000 15000 50000

0.3
355000 1145000
270000 900000
85000 245000
75000 250000
10000 -5000
100,000
50,000
175,000 0.65 0.35
120,000 CI NCI TOTAL
5,000 acquisition c 442,000 238,000 680,000
286,000 bv of sill na 286,000 154,000 440,000
154,000 excess over 156,000 84,000 240,000
net over 100,750 54,250 155,000
goodwill 55,250 29,750 85,000
90,000
20,000
10,000 acquisition c 386,750 208,250 595,000
50,000 bv of sill na
35,000 excess over 156,000 84,000 240,000
40,000 net over 155,000
10,000 goodwill 85,000
100,750
54,250

85,000
55,250
29,750
735,000 735,000
Jan 1 2015
620000
184000
-520000
284,000
 0.6 0.4
CI NCI Total
1710000 1140000 2850000

1650000 1100000 2750000

300
400
700