Acquirer Company issued 80,000 new shares of its P10 par value ordinary shares and paid cash of P2,000,000 for the net assets of Acquiree Company on January 2, 2021. Acquirer also agreed to pay P500,000 one year after the acquisition date if the net income of Acquiree will exceed P10,000,000. The share of Acquirer was valued at P15. At this date, the fair value and book value of Acquiree's identifiable assets and liabilities were the same except for inventory which was undervalued by P50,000 and Equipment which was underdepreciated by P100,000. The financial statements of Acquirer and Acquiree were (see image below). As of the acquisition date, there was only a low probability of the profit target being met, so the fair value of the additional consideration was determined at P150,000. Acquirer also incurred the following costs: Finder's fee - 20,000; Professional fee - 60,000; Audit and accountant's fee related to stock issuance - 10,000 and Printing and registration of shares - 5,000.

Acquirer Acquiree Cash 4,500,000 450,000 Accounts Receivable 1,200,000 950,000 Inventory 1,500,000 700,000 Equipment 1,800,000 1,520,000 Goodwill 90,000 Total 9,000,000 3,710,000 Liabilities 1,000,000 550,000 Share Capital 1,600,000 600,000 Share Premium 900,000 950,000 Retained Earnings 5,500,000 1,610,000 Total 9,000,000 3,710,000