Case A

RED COMPANY issued 120,000 shares of its P25 par common stock for the net assets of BLUE CORPORATION in a business combination completed on March1, 2019. Blue Corporations net assets are worth P3,800,000 at FMV. Out of pocket costs of the combination were as follows:

Legal fees	26,000
Contingent consideration (probable & measurable)	18,000
Printing costs of stock certificates	8,500
Finders fees	27,000
Professional fees paid to a CPA	21,000
Fees paid to company lawyers	23,450
Fees paid to company accountants	38,900

The goodwill from the business combination is P418,000.

How much is the FMV per share of RED COMPANY at March 1, 2019? Show Solution.

a. P 25 c. P 30

b. P 40 d. P 35

Case B

WHITE COMPANY issued 100,000 shares of P20 par common stock for all the outstanding stock of BLACK CORPORATION in a business combination consummated on August 1, 2019. WHITE COMPANY common stock was selling at P30 per share at the time the business combination was consummated. Out-of-pocket costs of the business combination were as follows:

Finder's fee	P 50,000
Accountant's fee (advisory)	10,000
Legal fees (advisory)	20,000
Printing costs of stock certificates	5,000
SEC registration costs and fees	12,000
Total	P 97,000

The acquisition cost of the combination will be: (Show Solution)

a. P3,097,000 c. P3,017,000

b. P3,080,000 d. P3,000,000

Case C

GRAY COMPANY acquired the net assets of VIOLET COMPANY by issuing 10,000 shares of stocks. Additional cash payments made by GRAY CORPORATION in completing the acquisition were:

Brokers fee paid to firm that located VIOLET CORP.	P10,000
Cost to register and issue stocks	40,000
Professional fees paid to accountants	20,000
Professional fees paid to lawyers	20,000
Professional fees paid to official valuers	20,000
Indirect acquisition cost	15,000

Assuming the stocks issued by GRAY COMPANY has a market price of P40, how much is the total assets after the business combination? Show Solution.

a. P 1,720,000 c. P 1,870,000

b. P 1,800,000 d. P 1,145,000