PROBLEM 2 Wholly and Partially owned Subsidiary Bargain Purchase Gain with FV of NCI Pakistan Company issued 12,000 shares of its P1 par common stock for 80 interest in Syria Company The fair value of Pakistan Company stock is P25 Syria Company had been plagued by many troubles, including a lawsuit from a competitor for patent infringement In view of the uncertainty of the outcome of the lawsuit and its impact on the future viability of Syria Company, the existing owner of Syria Company was willing to sell the company at a discount to its net fair value The fair value of the identifiable net assets, non controlling interests and the consideration transferred were reassessed and deemed to be reliably determined Fair value of the non controlling interests as at acquisition date was P90,000 The separate balance sheets of the two companies immediately before the consolidation with acquiree's fair value were presented as follows Syria Syria Pakistan Book value Assets Book value Fair value Cash P 334,800 Accounts receivable 86,400 P 24,000 P 24,000 Inventory 96,000 60,000 66,000 Land 120,000 48,000 84,000 Buildings and equipment (net) 744,000 222 000 372,000 Copyright 0 60 000 Total Assets P1 381 200 P 354 000 P 606 000 Liabilities and Stockholders' Equity Accounts payable P 96 000 P 42 000 P 42 000 Estimated liability for contingencies 6,000 Bonds payable 240,000 120 000 120,000 Common stock, P1 par 32,160 12,000 Paid in capital in excess of par 435,840 108,000 Retained earnings 577200 72 000 Stockholders' Equity P1 381 200 P 354 000 P438 000 Required 1 Prepare journal entry to record investment in the books of the acquirer company 2 Prepare schedule for determination and allocated excess a Proportionate Basis Approach b Fair Value Basis Approach 4 Prepare the working paper eliminating entries for purposes of preparing consolidated balance sheet a Proportionate Basis Approach b Fair Value Basis Approach 5 Prepare a consolidated working paper on January 1, 20x4 a Proportionate Basis Approach b Fair Value Basis Approach 6 Prepare the consolidated balance sheet immediately after acquisition a Proportionate Basis Approach b Fair Value Basis Approach

Question

PROBLEM 2  Wholly and Partially owned Subsidiary  Bargain Purchase Gain with FV of NCI Pakistan Company issued 12,000 shares of its P1 par common stock for 80  interest in Syria Company  The fair value of Pakistan Company stock is P25  Syria Company had been plagued by many troubles, including a lawsuit from a competitor for patent infringement  In view of the uncertainty of the outcome of the lawsuit and its impact on the future viability of Syria Company, the existing owner of Syria Company was willing to sell the company at a discount to its net fair value  The fair value of the identifiable net assets, non controlling interests and the consideration transferred were reassessed and deemed to be reliably determined  Fair value of the non  controlling interests as at acquisition date was P90,000  The separate balance sheets of the two companies immediately before the consolidation with acquiree's fair value were presented as follows  Syria Syria Pakistan Book value Assets Book value Fair value Cash P 334,800 Accounts receivable 86,400 P 24,000 P 24,000 Inventory 96,000 60,000 66,000 Land 120,000 48,000 84,000 Buildings and equipment (net) 744,000 222 000 372,000 Copyright  0    60 000 Total Assets P1 381 200 P 354 000 P 606 000 Liabilities and Stockholders' Equity Accounts payable P 96 000 P 42 000 P 42 000 Estimated liability for contingencies  6,000 Bonds payable 240,000 120 000 120,000 Common stock, P1 par 32,160 12,000 Paid in capital in excess of par 435,840 108,000 Retained earnings 577200 72 000 Stockholders' Equity P1 381 200 P 354 000 P438 000 Required  1  Prepare journal entry to record investment in the books of the acquirer company  2  Prepare schedule for determination and allocated excess  a  Proportionate Basis Approach b  Fair Value Basis Approach 4  Prepare the working paper eliminating entries for purposes of preparing consolidated balance sheet  a  Proportionate Basis Approach b  Fair Value Basis Approach 5  Prepare a consolidated working paper on January 1, 20x4  a  Proportionate Basis Approach b  Fair Value Basis Approach 6  Prepare the consolidated balance sheet immediately after acquisition  a  Proportionate Basis Approach b  Fair Value Basis Approach

Accepted Answer

The Answer is in the image, click to view ...

Question

PROBLEM 2. Wholly and Partially-owned Subsidiary: Bargain Purchase Gain with FV of NCI Pakistan Company issued 12,000 shares of its P1 par common stock for

Step by Step Solution

Step: 1

Get Instant Access with AI-Powered Solutions

Step: 2

Step: 3

Ace Your Homework with AI

Recommended Textbook for

Accounting

Students also viewed these Accounting questions

Question

Question

Question

Question

Question

Question

Question

Question

Question