Justin Company purchased a plant facility consisting of land and buildingfrom Joshua Company in exchange for 200,000 shares of Justin's sharecapital. On the acquisition date, Justin's shares had a closing market priceof P65 on a stock exchange while its par value is P50. The plant facility was carried in Joshua's books at P3,000,000 for the land and P8,000,000 forthe building at the exchange date. Current assessed values for the landand building, respectively are P4,500,000 and 7,000,000. How muchshould the Land be recorded in the books?

Justin Company purchased a plant facility consisting of land and buildingfrom Joshua Company in exchange for 200,000 shares of Justin's sharecapital. On the acquisition date, Justin's shares had a closing market priceof P65 on a stock exchange while its par value is P50. The plant facility was carried in Joshua's books at P3,000,000 for the land and P8,000,000 forthe building at the exchange date. Current assessed values for the landand building, respectively are P4,500,000 and 7,000,000. How muchshould the Land be recorded in the books?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Justin Company purchaseda plant facility consisting of land and building from Joshua Company in exchange for 200,000 shares of Justin's share capital. On the acquisition date, Justin's shares had a closing market price of P65 on a stock exchange while its par value is P50O. The plant facility was carried in Joshua's books at P3,000,000 for the land and P8,000,000 for the building at the exchange date. Current assessed values for the land and building, respectively are P4,500,000 and 7,000,000. How much should the Land be recorded in the books? (Answer should be two decimal places, no comma or peso sign) *
S acquired 100 percent of F for P275,000. At the date of acquisition, F had the following book and market values: (see image below) What is the amount of the “Investment in F” account on S’s financial records at the acquisition date?
On January 15, 2022, 5,000 share with par value of P 100 per share of MANE Company were issued in exchange for the land. The land has a fair value of P 800,000 and the market value of the stock is P 150 per share. Prepare the journal entry on January 15, 2022 to record the acquisition
If CARDO Co purchases the net assets of SYANO Co by issuing 5,000 shares of their P20 par value shares with a fair value of P40 per share, incurs a mortgage loan for P90,000, pays P150,000 cash and paying direct, indirect and stock issue costs of P75,000, P50,000 and P40,000 respective. Compute for the total assets at the date of acquisition
On January 1, 2020, Tam acquired 15% of outstanding common stocks of Tum at a price of P120,000 and paid acquisition related cost of P10,000. Tam acquired the investment for trading purposes. On April 1, 2020, Tam acquired additional 25% of outstanding common stocks of Tum at a price of P200,000 and paid acquisition related costs of P30,000. On July 1, 2020, Tam acquired additional 50% of outstanding common stocks of Tum at a price of P500,000 and paid acquisition related cost of P50,000. On July 1, 2020, Tum’s net asset is reported at P1,000,000 but its land is overstated by P300,000 while its building is understated by P100,000. It is the company policy of Tam to initially measure the non-controlling interest in net assets at fair value. Tum reported net income for the year ended December 31, 2020 in the amount of P100,000. What is the goodwill to be recognized by Tam arising from acquisition of Tum in its Consolidated Statement of Financial Position as of December 31, 2020?…
Cardo co purchases the net assets of allana co by issuing 50000 shares of their 20 par value shares with a fair value of 40 per share , pays 100000 cash, and payin direct and indirect cost of 75000 and 50000 respectively, determine the total amount of assets to be reported by Cardo Co. after the acquisition
Puncho Company is acquiring the net assets of Semos Company in exchange for common stock valued at $900,000. The Semos identifiable net assets have book and fair values of $400,000 and $800,000, respectively. Compare accounting for the acquisition (including assignment of the price paid) by Puncho with accounting for the sale by Semos.
On 1 July 2020, Big Ltd acquired all the issued share capital of Small Ltd for cash for an amount of $1,050,000. On the date of the acquisition, the statements of the financial position of both entities are as follows: Big Ltd ($) Small Ltd ($) Assets Cash 21,000 10,500 Accounts receivable 315,000 115,500 Land 420,000 210,000 Plant 1,680,000 1,050,000 Investment in Small Ltd 1,050,000 3,486,000 1,386,000 Liabilities Accounts payable 126,000 63,000 Loans payable 840,000 315,000 Shareholders’ equity Share capital 2,100,000 420,000 Retained earnings 420,000 588,000 3,486,000 1,386,000 Required: a.Calculate the goodwill on acquisition assuming all net assets of small Ltd are recorded in fair value. b.Prepare consolidation journal entries. c.
Gusion Company purchases 9,000 shares of Layla Company for P70 per share. Before acquisition, Layla Company has the following balance sheet: On the date of acquisition, Gusion believes that the inventory has a fair value of P400,000 and that the property and equipment is worth P500,000. All other assets and liabilities fair value is equal to their carrying amount. The cost of disposal of the noncurrent asset held for sale is P5,000. Layla’a shares was selling ex-dividend. The goodwill/gain on bargain purchase in the consolidated statement is: A. (P40,000) B. P30,000 C. P185,000 D. (P35,000)
Prateroon's asset has a book value of P10,460,00 and a fair market value of P11,500,000 and the book value of its liabilities amounted to P3,250,000 and the fair market value of P4,000,000. On January 1, 2020 Prateroon Company purchased all the net assets of Stranemon Company consisting of: > Issuance of 20,000 unissued shares of its P10 par value ordinary share capital. As of this date, the shares of Prateroon were selling at P40 per share. > Issuance of bonds with a face value of P300,000 but are currently at 110. > A contingent payment of P200,000 cash on January 1, 2020, if the average income of Stranemon Company during the two-year period (2020-2021) exceeds P250,000 per year. Prateroon estimates that there is a 20% chance or probability that the P200,000 payment will be required. > Issuance of 5,000 additional shares on January 1, 2022 to the former shareholders of Stranemon Company if the average income cover the next two years (2020-2021) equalled or exceeded P350,000. The…
On July 1, 2020, SM acquired 80% of outstanding shares of BDO in exchange for P4M cash and 100,000 preferred shares with par value of P100 and quoted price of P200. On the acquisition date, the net assets of BDO has book value of P39M but a building with remaining useful life of 10 years is overstated by P4M. On October 1, 2020, BDO sold an equipment to SM at a gain of P200,000. On the date of sale, the equipment has remaining life of 5 years. On October 1, 2020, SM rented a space to BDO at a monthly rental of P50,000. For the year ended December 31, 2020, BDO reported net income of P900,000 and declared dividends of P100,000 on December 30, 2020. On the other hand, SM reported net income of P2M on its separate income statement and declared dividends of P1,000,000. On the separate financial statements of SM, the retained earnings on December 31, 2019 is P10,000,000 while its stockholders equity is P25,000,000. SM accounted its Investment in BDO in its separate financial statements…
On January 1, 2023, Tamarisk Company issued 1,450 of its $20 par value common shares with a fair value of $60 per share in exchange for the 2,000 outstanding common shares of Sheffield Company in a purchase transaction. Registration costs amounted to $2,500, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Cash Accounts receivable (net) Inventory Plant and equipment (net) Land Total assets Accounts payable Notes payable Common stock, $20 par value Other contributed capital Retained earnings Total equities Tamarisk Company $83,000 103,000 56,000 95,000 23,500 $360,500 $63,000 89,500 100,000 60,000 48,000 $360,500 Sheffield Company $12,600 18,000 25,000 46,500 22,000 $124,100 $19,500 30,000 40,000 27,500 7,100 $124,100 Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.

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