ANSWER THE FOLLOWING AND PROVIDE STE BY STEP EXPLANATION:

Problem 1 On January 1, 2011, Pamela Corporation and Sheila Company have entered into a business combination agreement under which Pamela will issue 8,000 shares of its P10 par value ordinary share capital to acquire all the identifiable net assets of Sheila Company. Just prior to the business combination, the individual statements of financial position of Pamela and Sheila showing the carrying value and their fair value are as follows: Pamela Corporation Sheila Corporation Statement of Financial Book Book Position Item Value Fair Value Value Fair Value Cash and Receivables P150,000 P150,000 P 40,000 P 40,000 Land 100,000 170,000 50,000 85,000 Plant Assets (net) 300,000 400,000 160,000 230,000 Total Assets P550,000 P720,000 P250,000 P 355,000 Ordinary Share Capital P200,000 P100,000 Share Premium 20,000 10,000 Accumulated Profits 330,000 140,000 Total Equities P550,000 P250,000 As of acquisition date, Pamela shares currently are trading at P50 and Sheila P5 par value shares are trading at P18 each. Required: Determine the amount to be reported immediately following the business combination for each of the following items in the consolidated statement of financial position.Problem 2 On January 1, 2011, Petron Corporation acquires the net assets of the Shell Corporation for P625,000 cash. Prior to the business combination, Shell Corporation has the following statement of financial position: Shell Corporation Statement of Financial Position January 1, 2011 Assets Liabilities and Equity Current assets: Current Liabilities P 62,500 Accounts P150,000 Shareholders' Receivable equity: Inventories 125,000 P275,000 Ordinary Share Property, Plant, Capital, and P 10 par P250,000 Equipment 350,000 Accumulated Profits 312,500 562,500 Total Liabilities Total Assets P625,000 and P625,000 Equity The carrying values of Shell's identifiable net assets approximated their fair value, except for inventories and property, plant, and equipment, which have fair market values of P175,000 and P375,000 respectively. To effect the business combination, Petron paid its legal advisers P6,250 representing their professional fees. Required: 1. Prepare journal entries to record the acquisition on the Petron Corporation's books. Provide computations to support your entry. 2. Prepare journal entries to record the sale on the books of Shell Corporation and the subsequent total liquidation of the corporation.Problem 3 The following is a summary of the statement of financial position of Stratification Company showing data regarding the carrying values and fair values as of December 31, 2011: Statement of Financial Position Item Book Value Fair Value Cash P 70,000 P 70,000 Trade and other Receivables 125,000 125,000 Merchandise Inventory 80,000 140,000 Land 62,500 90,500 Buildings and Machinery 500,000 443,250 Accumulated Depreciation (187,500) Total Assets P650,000 P868,750 Trade and other Payables P 12,500 P 12,500 Bonds Payable 200,000 180,000 Ordinary Share Capital (P5 par value) 187,500 Share Premium 87,500 Accumulated Profits 162,500 Total Liabilities and Equities P650,000 On January 1, 2012, Permutation Corporation entered into a business combination agreement by issuing 15,000 shares of its P10 par value ordinary share capital in exchange for the net assets of Stratification Company. As of this date, the shares of Stratification were selling at P18 per share while that of the Permutation were selling at P50 per share. Permutation Corporation in carrying out the business combination agreement incurred the following additional cash payments. Consultancy fee paid to broker that located Stratification P 12,500 Legal fee for stock issued by Permutation 3,750 Share issue cost of new shares of Permutation 6,250 General and administrative expenses 11,250 Cost of SEC registration of Permutation shares 1,250 Required: Prepare all indicated entries to record the acquisition on the books of Permutation Corporation