Chapter 15 Afar Solman (Dayag 2015ed) - Prob 4 & 5
Chapter 15 Afar Solman (Dayag 2015ed) - Prob 4 & 5
Chapter 15 Afar Solman (Dayag 2015ed) - Prob 4 & 5
Problem IV
Partial-goodwill (Proportionate Basis)
Fair value of subsidiary (75%):
Consideration transferred: Cash……………………….. P270,000 (75%)
Less: Book value of stockholders’ equity
(net assets) – S Company:
(P480,000 – P228,000) x 75%....................................... 189,000 (75%)
Allocated excess………………………………………………... P 81,000 (75%)
Less: Over/undervaluation of assets and liabilities:
[(P612,000 – P228,000) – (P480,000 – P228,000) x 75% 99,000 (75%)
Negative excess: Bargain purchase gain (to controlling
interest or attributable to parent only)………………. (P18,000) (75%)
Full-goodwill (Fair Value Basis)
Fair value of subsidiary (100%):
Consideration transferred: Cash……………………….. P270,000 ( 75%)
Fair value of non-controlling interest (given)………… 98,400 ( 25%)
Fair value of subsidiary ………………………………………… P368,400 (100%)
Less: Book value of stockholders’ equity
(net assets) – S Company:
(P480,000 – P228,000) x 100%..................................... 252,000 (100%)
Allocated excess………………………………………………... P116,400 (100%)
Less: Over/undervaluation of assets and liabilities:
[(P612,000 – P228,000) – (P480,000 – P228,000) x 100% 132,000 (100%)
Negative excess: Bargain purchase gain (to controlling
interest or attributable to parent only)………………. (P15,600) (100%)
Problem V
1.
A. Investment in Sewell 675,000
Cash 675,000
B. Investment in Sewell 675,000
Cash 675,000
C. Investment in Sewell 318,000
Cash 318,000
2.
A.
Fair value of Subsidiary:
Consideration transferred P675,000
Less: BV of SHE of S (P450,000 + P180,000 + P75,000)x100% 705,000
Allocated excess P( 30,000)
Less: Over/under valuation of A and L: Inc. (Dec.)
Inventory (P30,000 – P20,000) x 100% (P10,000)
Land (P50,000 – P70,000) x 100% __20,000 __10,000
Bargain Purchase Gain – full (P 40,000)
B.
Partial Goodwill
Fair value of Subsidiary:
Consideration transferred P675,000
Less: BV of SHE of S (P450,000 + P180,000 + P75,000) x 90% 634,500
Allocated excess P 40,500
Less: Over/under valuation of A and L: Inc. (Dec.)
Inventory (P30,000 – P20,000) x 90% (P9,000)
Land (P50,000 – P70,000) x 90% __18,000 __9,000
ADVANCE ACCOUNTING 2015 | ANTONIO DAYAG JR.
Full-Goodwill
Fair value of Subsidiary:
Consideration transferred P 318,000
FV of NCI* _158,000
P 476,000
Less: BV of SHE of S (P620,000 + P140,000 + P20,000) x 100% 780,000
Allocated excess (P304,000)
Less: Over/under valuation of A and L: Inc. (Dec.)
Inventory (P30,000 – P20,000) x 100% (P10,000)
Land (P50,000 – P70,000) x 100% __20,000 _10,000
Bargain Purchase Gain – full (parent only) (P314,000)
*BV of SHE of S P780,000
Adjustments to reflect fair value 10,000
FV of SHE of S P790,000
x: NCI% 20%
FV of NCI P158,000
3.
A.
Common Stock – Sewell 450,000
Paid in capital in excess of par – Sewell 180,000
Retained Earnings – Sewell 75,000
Land 20,000
Inventory 10,000
Investment in Sewell 675,000
Retained earnings (gain) – Parent (since
balance sheet accounts are being
examined) 40,000
B.
Partial-Goodwill (Proportionate Basis)
Common Stock – Sewell 450,000
Paid in capital in excess of par – Sewell 180,000
Retained Earnings – Sewell 75,000
Land 20,000
ADVANCE ACCOUNTING 2015 | ANTONIO DAYAG JR.
Goodwill 31,500
Inventory 10,000
Investment in Sewell 675,000
Non-controlling Interest 71,500
BV – SHE of Sewell
(P450,000 + P180,000 + P75,000) P705,000
Adjustments to reflect fair value 10,000
FV of SHE of Sewell P715,000
x: NCI% 10%
FV of NCI (partial) P 71,500
BV – SHE of Sewell
(P620,000 + P140,000 + P20,000) P780,000
Adjustments to reflect fair value 10,000
FV of SHE of Sewell P790,000
x: NCI% 20%
FV of NCI (full) P158,000