FINAL REQUIREMENT IN ADVACC DOCX

Title	FINAL REQUIREMENT IN ADVACC
Author	Michelle Pisala
Pages	143
File Size	388.7 KB
File Type	DOCX
Total Downloads	337
Total Views	934

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BUSINESS COMBINATION 1. On December 2015, Killua Ltd. acquired all the assets and liabilities of Gon Ltd. with Killua Ltd. issuing 100,000 shares to acquire these net assets. The fair value of Gon Ltd.'s assets and liabilities at this date were: Cash P50, 000 Furniture and Fittings 20, 000 Accounts Receivable 5, 000 Plant 125, 000 Accounts Payable 15, 000 Current Tax Liability 8, 000 Provision for annual leave 2, 000 The financial year for Killua Ltd. is January- December. The fair value of each Killua Ltd. share at acquisition date is 1.90. At acquisition date, the acquirer could only determine a provisional fair value for the plant. On March 1, 2016, Killua Ltd. received the final value from the independent appraisal, the fair value at acquisition date being P131, 000. Assuming the plant had a further five year life from the acquisition date. The amount of goodwill arising from the business combination at December 1, 2015 ? a. P15, 000 c. P5, 000 b. 9, 000 d. 0 ANSWER: B Consideration transferred (100, 000 x 1.90) P190, 000 Less: Fair Value of net identifiable assets acquired Cash P50, 000 Furniture & Fittings 20, 000 Accounts Receivable 5, 000 Plant 131, 000 Accounts Payable (15, 000) Current tax liability (8, 000) Liabilities (2, 000) 181, 000 Goodwill P9, 000 2. The E. Vendivel Company acquired the net assets of the Vivar Company on January 1, 2015 and made the following entry to record the purchase: Current Assets……………………………………… 100, 000 Equipment…………………………………………… 150, 000 Land…………………………………………………….. 50, 000 Buildings………………………………………………. 300, 000 Goodwill………………………………………………. 100, 000 Liabilities…………………………………. 80, 000 Common Stock, P1 par……………. 100, 000 Paid-in capital in excess of par… 520, 000 Assuming that the additional shares on January 1, 2017 would be issued on that date to compensate for any fall in the value of E. Vendivel common stock below P16 per share, the settlement would be to cure the deficiency by issuing added shares based on their fair values on January 1, 2017. The fair price of the shares on January 1, 2017 was P10. What is the additional number of shares issued on January 1, 2017 to compensate for any fall in the value of the stock? a. P160, 000 c. 60, 000 b. 100, 0000 d. 10, 000...