Accounting for Business Combination

Consolidation - Date of acquisition

2. On January 1, 20X2, Pol Inc. issued 25,000 shares of its P10 par value common stock for 80% of the outstanding shares of Sci Company. The fair value of Pol Inc. stock is P28. Sci Company (SC) measures non-controlling interest (NCI) at fair value. Given below are the statements of financial position (SFP) of the companies before the acquisition: Pol Inc. Statement of Financial Position January 1, 20X2 Assets Liabilities and Equity Cash P200,000 Accounts Payable P210,000 Accounts Receivable 185,000 Bonds Payable 420,000 Inventory 190,000 Common Stock, P10 par value 400,000 Land 300,000 Additional Paid-In Capital (APIC) 500,000 Building, net of depreciation 740,000 Retained Earnings 505,000 Equipment, net of depreciation 420,000 Total Liabilities and Equity P2,035,000 Total Assets P2,035,000 Sci Company Statement of Financial Position January 1, 20X2 Book Value Fair Value Accounts Receivable P55,000 P55,000 Inventory 125,000 150,000 Land 90,000 130,000 Building, net of depreciation 320,000 500,000 Equipment, net of depreciation 130,000 300,000 Total Assets P720,000 P1,135,000 Accounts Payable P160,000 P160,000 Bonds Payable 240,000 240,000 Common Stock, P2 par value 40,000 Additional Paid-In Capital 160,000 Retained Earnings 120,000 Total Liabilities and Equity P720,000 Required: Prepare the consolidated statement of financial position on the date of acquisition by showing the consolidation procedures. Tip: Follow the process in the handout