The following are the balances of BIG Company and GIRL Company as of January 1, 20x1. Fair BIG COMPANY Book Value Market Value ASSETS Cash Accounts Receivable Inventory Property, Plant and Equipment, net Goodwill Fair Book Market Value Value LIABILITY AND EQUITY 105,000 105,000 Accounts Payable 550,000 470,000 Mortgage Payable 220,000 300,000 Ordinary Share, 20 par 4,790,000 4,500,000 Share Premium 100,000 100,000 Retained Earnings 300,000 330,000 1,300,000 1,320,000 2,000,000 ? 775,000 ? 1,390,000 ? GIRL COMPANY Book Value Fair Market Value Cash Accounts Receivable Inventory Property, Plant and Equipment, net Goodwill 300,000 300,000 Accounts Payable 600,000 470,000 Mortgage Payable 350,000 300,000 Ordinary Share, 20 par 8,910,000 10,000,000 Share Premium 150,000 100,000 Retained Earnings Fair Book Market Value Value 550,000 500,000 2,500,000 2,480,000 3,000,000 ? 2,760,000 ? 1,500,000 ? The companies combined their resources and formed BIGGEST Co. Research and development with a fair market value of P120,000 was not included in the books of Big Company. An unrecorded interest payable worth P20,000 was also not included in the books of Girl Company. The new company issues 16,000 shares of 500 par value common stocks with fair value of P550 and pays additional 1,500,000 and incurs a mortgage loan of P1,000,000. The company also paid a direct costs of 50,000 and indirect cost of 20,000. P15,000 direct cost and P5,000 stock issue cost remain unpaid. Chan Co. also pay BIG and GIRL additional P100,000 net income after 1 year if its net income exceed P3,000,000, there is a 90% chance of meeting the target income. Determine the total EQUITY of BIGGEST CO. immediately after the business combination. The following are the balances of BIG Company and GIRL Company as of January 1, 20x1. Fair BIG COMPANY Book Value Market Value ASSETS Cash Accounts Receivable Inventory Property, Plant and Equipment, net Goodwill Fair Book Market Value Value LIABILITY AND EQUITY 105,000 105,000 Accounts Payable 550,000 470,000 Mortgage Payable 220,000 300,000 Ordinary Share, 20 par 4,790,000 4,500,000 Share Premium 100,000 100,000 Retained Earnings 300,000 330,000 1,300,000 1,320,000 2,000,000 ? 775,000 ? 1,390,000 ? GIRL COMPANY Book Value Fair Market Value Cash Accounts Receivable Inventory Property, Plant and Equipment, net Goodwill 300,000 300,000 Accounts Payable 600,000 470,000 Mortgage Payable 350,000 300,000 Ordinary Share, 20 par 8,910,000 10,000,000 Share Premium 150,000 100,000 Retained Earnings Fair Book Market Value Value 550,000 500,000 2,500,000 2,480,000 3,000,000 ? 2,760,000 ? 1,500,000 ? The companies combined their resources and formed BIGGEST Co. Research and development with a fair market value of P120,000 was not included in the books of Big Company. An unrecorded interest payable worth P20,000 was also not included in the books of Girl Company. The new company issues 16,000 shares of 500 par value common stocks with fair value of P550 and pays additional 1,500,000 and incurs a mortgage loan of P1,000,000. The company also paid a direct costs of 50,000 and indirect cost of 20,000. P15,000 direct cost and P5,000 stock issue cost remain unpaid. Chan Co. also pay BIG and GIRL additional P100,000 net income after 1 year if its net income exceed P3,000,000, there is a 90% chance of meeting the target income. Determine the total EQUITY of BIGGEST CO. immediately after the business combination
