Required:

1. Prepare the acquisition of the net assets of MA Corporation in the books of BS Corporation if:

• The stock issued by BS Corporation has a fair value of ₱64 per share.

2. Prepare the statement of financial position of BS Corporation after the business combination considering requirement A.
    

1. The following are the statement of financial position of BS and MA Corporation on January 2, 2020, just before they entered into a business combination: BS Corporation Assets Cash Accounts receivable Merchandise inventory Property and equipment Accumulated depreciation Goodwill Total Assets Book Value P310,000 75,000 200,000 400,000 (100,000) P 885,000 Liabilities and Stockholder' Equity Accounts payable Bonds payable Common stock, P30 par value Common stock, P20 par value Additional paid in capital Retained earnings Total Liabilities and SHE P 125,000 200,000 210,000 50,000 300,000 885,000 Fair Value P310,000 75,000 250,000 450,000 P 125,000 225,000 MA Corporation Legal fees to arrange the business combination Finder's fees Other professional fees Indirect costs Book Value P 35,000 70,000 50,000 100,000 (25,000) 50,000 P280,000 P70,000 30,000 50,000 60,000 70,000 P280,000 Fair Value P 35,000 70,000 78,000 124,000 Listing fee of shares in the Philippine Stock Exchange (PSE) Stock issuance costs (printing of stock certificates and SEC registration fees) 30,000 BS Corporation acquired the net assets of MA Corporation by paying cash of P10,000 and issuing 2,500 shares of its P30 par value common stock. In addition, BS Corporation incurred the following costs in completing the acquisition: P70,000 42,000 P30,000 10,000 50,000 10,000 5,000 75,000 BS Corporation also agreed to pay an additional P125,000 on January 2, 2022, if the average income for the 2-year period of 2020 and 2021 exceeds P80,000 per year. The expected value is estimated at P50,000 based on the 40% probability of achieving the target average income.