1. On January 2, 2019, PERSIS Corporation issues its own P10 par common stock for all the outstanding stock of SINECO Corporation in a business combination. SINECO is dissolved. In addition, PERSIS pays P20,000 for registering and issuing securities and P30,000 for other costs of combination. The market price of PERSIS’s stock on January 2, 2019, is P30 per share. Relevant balance sheet information for PERSIS and SINECO Corporations on December 31, 2018, just before the business combination, is as follows (in thousands):
Required: A. Assume that PERSIS issues 25,000 shares of its stock for all of SINECO’s outstanding shares. a) Prepare journal entries to record the business combination of PERSIS and SINECO b) Prepare a balance sheet for PERSIS Corporation immediately after the business combination
B. assume that PERSIS issues 15,000 shares of its stocks for all of SINECO’s outstanding shares. a) Prepare journal entries to record the business combination of PERSIS and SINECO b) Prepare a balance sheet for PERSIS Corporation immediately after the business combination
2. The balance sheets of PHULE Corporation and SEN Corporation at December 31, 2018, are summarized together with fair value information as follows (in thousands): On January 1, 2019, PHULE Corporation acquired all of SEN Corporations outstanding stock for P300,000. PHULE paid P100,000 cash and issued a five- year, 12% note for the balance. SEN Corporation was dissolved.
Prepare a balance sheet for PHULE Corporation on January 1, 2019, immediately after the business combination.
3. On January 1, 2019, Finch Corporation purchased 75% of the common stock of Grass Co. Separate balance sheet data for the companies at the combination date are given below:
At the date of combination, the book values of Grass’s net assets were equal to the fair value except for Grass’s inventory, which had a fair value of P60,000.
Compute for the following consolidated balances:
a. Inventory b. Goodwill/Gain on Bargain Purchase c. Total Liabilities d. Minority Interest e. Retained earnings f. Total assets
4. Parrot Corporation acquired 80% of Hollow Co. on January 1, 2019 for P24,000 cash when Hollow’s stockholders’ equity consisted of P10,000 of Common Stock and P3,000 of Retained Earnings. The difference between the price paid by Parrot and the underlying equity acquired in Hollow was allocated solely to a patent amortized over 10 years. The separate company statements for Parrot and Hollow appear in the first two columns of the partially completed consolidation working papers.
Required:
Prepare the consolidation working papers for Parrot and Hollow for the year 2019. Make sure to provide the necessary journal entries.
