Title | SOL. MAN. Chapter 2 BUS. COM. PART 2 |
---|---|
Author | Mark Ferrer |
Course | Business Combinations |
Institution | Manila Central University |
Pages | 12 |
File Size | 176.3 KB |
File Type | |
Total Downloads | 594 |
Total Views | 685 |
Chapter 2Business Combinations (Part 2)PROBLEM 1: TRUE OR FALSE1. FALSE – The transaction is a business combinationeffected through exchanges of equity interests.2. TRUE3. FALSE - ₱ 100 , the total increase in share capital andshare premium4. FALSE – (₱100 consideration transferred, equal to totalin...
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Chapter 2 Business Combinations (Part 2) PROBLEM 1 :TRUEORF ALSE 1 .F ALSE –Thet r a ns a c t i on i sabus i ne s sc ombi na t i one ffe c t e d t hr oughe x c ha nge sofe qui t yi nt e r e s t s . 2 . TRUE 3 .F ALSE -₱1 0 0 ,t het ot a li nc r e a s ei ns har ec a pi t a land s ha r e pr e mi um 4 .F ALSE – ( ₱1 0 0c ons i de r a t i on t r a ns f e r r e d, e qua lt ot ot a l i nc r e a s ei ns ha r ec api t a land s ha r epr e mi um,mi nus₱80f a i r va l ueofne tas s e t s )=₱2 0g oodwi l l 5 . TRUE 6 .F ALSE 7 . TRUE–The2 0 %i nt e r e s ti smos tl i ke l yt oha vebe e nc l as s i fie d a sI nv e s t me nti na s s o c i a t e .Ac c or di ngl y ,t her e me as ur e me ntga i n of₱1 0( ₱40f a i rva l ue-₱30c ar r yi ngamount )i sr e c ogni z e di n pr ofitorl os s . 8 . TRUE–( 1 0 0CT+6 0NCI+4 0PHEI )–1 8 0=20g oodwi l l 9 .F ALSE 1 0 .TRUE
PROBLEM 2: TRUEORF ALSE 1 . F ALSE–ma x i mum of1 2mont hsf r om a c qui s i t i onda t e 2 . TRUE 3. F ALSE[ 100–( 170–70pr ovi s i onala mt .+60f ai rval ue–80) ]=20 4 . TRUE 5 . TRUE 6 . TRUE 7 . TRUE 8 . TRUE 9 . TRUE( 1 0 0+2 0f a i rva l ueofc ont i nge ntc ons i de r a t i o n)–( 1 7 0–8 0 )=3 0 1 0 .TRUE–Go odwi l li snota ffe c t e dbyf a i rva l uec hange st ha ta r e notme a s ur e me ntpe r i oda dj us t me nt s . PROBLEM 3: FORCLASSROOM DI SCUSSI ON 1 . So l ut i o n:
Page|2 St e p1 Cons i de r at i ont r ans f e r r e d( s que e z e ) Nonc ont r ol l i ngi nt e r e s ti nt hea c qui r e e Pr e vi ous l yhe l de qui t yi nt e r e s ti nt heac qui r e e To t a l
4 , 2 0 0, 0 0 0 4, 2 0 0, 0 0 0 ( 4 , 00 0 , 00 0 F ai rva l ueofne ti de nt i fia bl ea s s e t sa c qui r e d( g i v e n) ) Goodwi l l( s t a r t ) 20 0 , 00 0 St e p2 ₱4 . 2 M c ons i de r a t i on t r a ns f e r r e d ÷ ₱1 0 0f a i rva l uepe rs ha r e= 4 2 , 0 0 0s har e si s s ue d
2 . So l ut i o n: Cons i der a t i ont r ans f e r r ed Nonc ont r ol l i ngi nt e r es ti nt heac qui r e e( 690 Kx40%* ) Pr e vi ous l yhe l dequi t yi nt e r es ti nt heac qui r e e To t a l Fai rval ueofne ti dent i fiabl eas s et sac qui r e d Goodwi l l
300 , 000 276, 000 138 , 000 714, 000 ( 690, 00 0) 24, 000
* 1 00% -( 20% +40%)=4 0%
3 . So l ut i o n: Cons i der a t i ont r ans f e r r ed Nonc ont r ol l i ngi nt e r es ti nt heac qui r e e( 1. 8 M x1 00 %) Pr e vi ous l yhe l dequi t yi nt e r es ti nt heac qui r e e To t a l Fai rval ueofne ti dent i fiabl eas s et sac qui r e d Goodwi l l
1, 80 0, 000 1, 8 00, 000 ( 1, 800, 000) -
4 . So l ut i o n: Cons i der a t i ont r ans f e r r ed NCI Pr e vi ous l yhe l dequi t yi nt e r es t To t a l Fai rval ueofne ti dent i fiabl e as s e t s
Pr ovi s i onal 2, 000, 0 00 2, 000, 00 0 ( 1, 98 0, 000)
Adj us t e d 2, 000, 00 0 2, 000, 000 ( 1, 900, 000) ( a )
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Goodwi l l
20, 000
100, 000
( a )
( 1 . 9 80 M –2 2 0Kpr ovi s i onala mount+1 40 Kf ai rval ue )
Thene wi nf or ma t i on obt a i ne d on J ul y1 ,2 0 x2i snota me a s ur e me ntpe r i oda dj us t me ntbe c aus ei tdoe snotr e l a t et of ac t s a ndc i r c ums t a nc e st ha tha vee x i s t e da sa tt hea c qui s i t i onda t e .Thi s i sa c c ount e df ora sapos t c ombi na t i one v e ntunde rPFRS9 . Ap r . 1, 2 0x2
Goodwi l l Mac hi ne Ap r . 1, Ac c umul a t e dde pr e c i a t i on(b) 2 0x2 Ret ai nede ar ni ngs
80, 000 80, 000 278 278
( b)
De pr e c i a t i onba s e don: pr ovi s i ona la mount : ( 2 2 0 K÷6 )x2 /1 2=6 , 1 1 1 f a i rval ue : ( 1 40 K÷4 )x2 /12=5, 8 3 3 De c r e a s ei na c c umul a t e dde pr e c i a t i on: ( 6 , 11 1–5 , 83 3 )=27 8
5 . So l ut i o n: Cons i der a t i ont r ans f e r r ed( 8 00K–30K –50K) Nonc ont r ol l i ngi nt e r es ti nt heac qui r e e Pr e vi ous l yhe l dequi t yi nt e r es ti nt heac qui r e e To t a l Fai rval ueofne ti dent i fiabl eas s et sac qui r e d Goodwi l l
720 , 000 720, 000 ( 600, 00 0) 120, 000
Ther e i mbur s e me ntf ort hea ppr ai s a lf e e si sa na c qui s i t i onr e l a t e dc os t .Thi si se xpe ns e d. Thet r ades e c r e tdoe snotqua l i f yas‘ c ons i de r a t i ont r a ns f e r r e d’ be c a us ei ti sr e t a i ne di nt hec ombi ne de nt i t ya f t e rt hebus i ne s s c ombi na t i on.
6 . So l ut i o n: Cons i der a t i ont r ans f e r r ed( 2 M –2 00 K‘ offmar ket ’val ue) Nonc ont r ol l i ngi nt e r es ti nt heac qui r e e Pr e vi ous l yhe l dequi t yi nt e r es ti nt heac qui r e e To t a l
1, 8 00, 000 1, 8 00, 000
Page|4 Fai rval ueofne ti dent i fiabl eas s et sac qui r e d ( 4 M +1 0 0K i nt angi bl eas s e tonr e a c qui r e dr t .–1 5 0K f r anc hi s e2 . 2 M)
Goodwi l l
( 1, 750, 000 ) 50, 000
J our na le nt r i e s J a n. I de nt i fiabl ea s s e t sa c qui r e d(4M +100K–150K) 3, 950, 00 1 , Goodwi l l 0 2 0x1 Li abi l i t i e sas s ume d 50, 000 2, 2 00, 00 Cas h( 2 M –2 0 0K) 0 t or e c o r dt heb us i ne s sc o mb i na t i o n 1, 800, 00 0 J a n. Co nt r a c tl i abi l i t y 230 , 000 1 , Cas h 200 , 000 2 0x1 Se t t l e me ntgai n 30, 000 t or e c o r dt hee ffe c t i v es e t t l e me nto fp r e e xi s t i n gr e l a t i o ns hi pa sas e pa r a t et r a ns a c t i o nf r o m b us i ne s sc o mb i na t i o nt r a ns a c t i o n
7 . So l ut i o ns : Re qui r e me nt( a) : Cons i der a t i ont r ans f e r r ed 2, 280, 00 0 2, 2 80, 000 ( 1, 900, 000) 380 , 000
( 10, 000s h.x₱2 0 0)+2 80 Kc ont i ngentc ons i de r at i on
Nonc ont r ol l i ngi nt e r es ti nt heac qui r e e Pr e vi ous l yhe l dequi t yi nt e r es ti nt heac qui r e e To t a l Fai rval ueofne ti dent i fiabl eas s et sac qui r e d Goodwi l l
Re qui r e me nt( b) : De c . 3 1, 2 0x1 J a n. 1 4, 2 0x2
Noe nt r y Shar epr e mi um –cont i nge nt c ons i de r a t i on
Shar ec a pi t al(2, 000x₱2 0pa r )
280 , 000 40, 000 240 , 000
Page|5 Shar epr emi um ( s q ue e z e ) t or e c o r dt h ei s s ua nc eo f2 , 0 00a d di t i o na l s h a r e s
Re qui r e me nt( c ) : De c . S har epr e mi um –c ont i nge nt 3 1, 2 0x1
c ons i de r a t i on
Shar epr emi um
280 , 000 280 , 000
Page|6 PROBLEM 4: EXERCI SES 1. So l ut i o ns : Re qui r e me nt( a) : ABCCo.
Combi ne d e nt i t y
I nc r e as e
800 , 000
976 , 000
1 7 6, 0 0 0
Shar ec api t al( ₱20pa r )
1 7 6, 0 0 0÷2 0pa r=8, 8 00s har e s Re qui r e me nt( b) : Cons i de r a t i ont r a ns f e r r e d(a) Nonc ont r ol l i ngi nt e r e s ti nt hea c qui r e e Pr e vi ous l yhe l de qui t yi nt e r e s ti nt heac qui r e e To t a l ( b) F ai rva l ueofne ti de nt i fia bl ea s s e t sa c qui r e d Goodwi l l
( a )
9 68 , 00 0 9 68 , 00 0 ( 8 0 0 , 0 0 0) 1 6 8, 0 0 0
Combi ne d e nt i t y 976, 000 1, 092, 00 0 2, 068 , 000
I nc r e as e
Combi ne d e nt i t y
I nc r e as e
I de nt i fiabl e as s e t s 2, 200 , 000 3, 600, 00 0 Li a bi l i t i e s 700 , 000 1, 300, 00 0 Fa i rv a l ueo fne ti d e nt i fia b l ea s s e t sa c q ui r e d
1, 400, 00 0
Shar ec api t al Shar epr e mi um To t a l s
( b)
ABCCo. 800 , 000 300 , 000 1 , 100, 000
ABCCo.
Re qui r e me nt( c ) : Re t ai ne de ar ni ngs=400 , 000
2. So l ut i o ns : Re qui r e me nt( a) :
968, 0 00
600 , 000 800 , 000
Page|7 Cons i der a t i ont r ans f e r r ed( 80, 000s h.x₱8) Nonc ont r ol l i ngi nt e r es ti nt heac qui r e e( 665 , 000x 10%* ) Pr e vi ous l yhe l dequi t yi nt e r es ti nt heac qui r e e* * To t a l Fai rval ueofne ti dent i fiabl eas s et sac qui r e d Goodwi l l
6 40, 000 66, 500 80, 0 00 786, 500 ( 665, 00 0) 121 , 500
*( 10, 00 0+8 0, 000)÷10 0, 000=90% c ont r ol l i ngi nt e r es t ; ( 100% -90%)=10% NCI * *( 10, 000s h.x₱8 )=80, 000 Re qui r e me nt( b) : 7/ 1/ 20x 2 I nve s t me nti ns ubs i di ar y( 80, 000x8) 640 , 000 Cas h t or e c o r dt hene wl ya c q ui r e ds ha r e s
64 0, 000
FVPLfinanc i a la s s e t s[ ( 8–5)x10, 000] 30 , 000 Unr e al i ze dgai n–P/L 30, 000 t or e me a s ur et hepr e v i o us l yhe l de q ui t yi nt e r e s t I nve s t me nti ns ubs i di ar y 80, 000 FVPLfinanc i a la s s e t s t or e c l a s s i f yt hep r e vi o us l yh e l de q ui t yi nt e r e s t
80, 000
3. So l ut i o n:
Re qui r e me nt( a) : Cons i der a t i ont r ans f e r r ed NCI Pr e vi ous l yhe l dequi t yi nt e r es t
Pr ovi s i onal 1, 800, 0 00 -
Adj us t e d 1, 800, 00 0 -
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To t a l Fai rval ueofne ti dent i fiabl e as s e t s Goodwi l l
1, 800, 00 0 ( 1, 70 0, 000)
1, 800, 000 ( 1, 600, 000)
100 , 000
( a )
200 , 000
( a )
( 2 . 6 M –300 Kpr ovi s i onala mount+200 Kf ai rval ue-. 9M)
Re qui r e me nt( b) : Aug . Go odwi l l 3 1, Tr a demar k
100 , 000 100 , 000
2 0x2
4. So l ut i o n:
Re qui r e me nt( a) : Set t l e me ntl os s( 36 0K–170 K‘ a t mar ke t ’=190‘ offmar ke t ’ ) Car r yi ngamountofr e l a t e das s e torl i abi l i t yr ec ogni ze d Adj us t e ds e t t l e me ntl os s J a n. 1 , 2 0x1
Set t l e me ntl os s Cas h
190 , 000 190 , 00 0
190 , 000 190 , 000
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Re qui r e me nt( b) : Cons i der a t i ont r ans f e r r ed( 2 . 2 M –190 K‘ offmar ket ’val ue) Nonc ont r ol l i ngi nt e r es ti nt heac qui r e e Pr e vi ous l yhe l dequi t yi nt e r es ti nt heac qui r e e To t a l Fai rval ueofne ti dent i fiabl eas s et sac qui r e d( 3 . 6 M– 1 . 8 M)
Goodwi l l
2, 0 10, 000 2, 0 10, 000 ( 1, 800, 000 ) 210 , 000
The₱1 7 0, 0 0 0“ a t ma r ke t ”v al uei ss ubs ume di ngoodwi l la ndnot r e c ogni z e da si nt a ngi bl ea s s e tbe c a us et he r ei snor e ac qui r e dr i ght .
5. So l ut i o n:
Re qui r e me nt( a) : Cons i der a t i ont r ans f e r r ed ( 10 , 0 00s h.x₱2 00 )+₱2 80 Kc ont i ngentc ons i der a t i on
Nonc ont r ol l i ngi nt e r es ti nt heac qui r e e Pr e vi ous l yhe l dequi t yi nt e r es ti nt heac qui r e e To t a l Fai rval ueofne ti dent i fiabl eas s et sac qui r e d Goodwi l l
Re qui r e me nt( b) : De c . Un r e al i ze dl os s–P/L(a) 3 1, Li a bi l i t yf orc ont i nge nt 2 0x c o n s i d e r a t i o n 1 J a n. Li a bi l i t yf orc ont i nge ntc ons i de r a t i on 1 4, Cas h 2 0x 2
2, 280, 00 0 2, 2 80, 000 ( 1, 920, 000 ) 360 , 000
120 , 000 120 , 000 400 , 000 400 , 000
( a )
Car r yi ngamountofc ont i nge ntc ons i de r a t i on12/31/20x1 Fai rval ue–12/31 /20x1 I nc r e a s ei nf a i rva l ueo fl i a b i l i t y( l o s s )
280 , 000 400 , 000 ( 120, 00 0
Page|1 0 )
Re qui r e me nt( c ) : De c . Li a bi l i t yf orc ont i nge ntc ons i de r a t i on 3 1, 2 0x 1
280 , 000
Gai none xt i ngui s hme ntofl i abi l i t y– P/L
PROBLEM 5: MULTI PLECHOI CE-THEORY 1 .B 2 .C 3 .A 4 .B 5 .D 6 .D 7 .A 8 .B 9 .D 1 0 .D
280 , 000
Page|1 1 PROBLEM 6: MULTI PLECHOI CE-COMPUTATI ONAL 1 .D So l ut i o n: Cons i der a t i ont r ans f e r r ed( s que e ze ) NCIi nt heac qui r e e Pr e vi ous l yhe l dequi t yi nt e r es ti nt heac qui r e e To t a l Fai rval ueofne ti dent i fiabl eas s et sac qui r e d Go o d wi l l( s t ar t )
2, 000, 000 2, 0 00, 000 ( 2, 000, 000) -
( 2, 000, 000÷20, 0 00s har es )=100pe rs har e
2 .C So l ut i o n: 2 M c ons i de r a t i on t r ans f e r r e d –4 00 K i nc r e a s ei n s ha r e pr e mi um =1 . 6 Mi nc r e a s ei ns har ec a pi t a l ; 1 . 6 M ÷2 0, 0 0 0s ha r e s=8 0
3 .B So l ut i o n: Out s t andi ngs har e sofFi nge r( ₱40, 0 00÷₱4par ) Ra t i o No .o fs ha r e si s s ue db yPo i nt( 10, 00 0s h. x2)
10, 000 2 : 1 20, 000
Cons i der a t i ont r ans f e r r ed( s que e ze ) NCIi nt heac qui r e e Pr e vi ous l yhe l dequi t yi nt e r es ti nt heac qui r e e To t a l Fai rval ueofne ti dent i fiabl eas s et sac qui r e d Go o d wi l l( s t ar t )
800, 000 800, 000 ( 800, 00 0) -
( 800, 00 0c ons i de r a t i ont r ans f e r r ed÷20, 000s h.i s s ue dbyPoi nt )=40
4 .C So l ut i o ns : Cons i der a t i ont r ans f e r r ed( 50, 000s h.x₱7)
3 50, 000
Page|1 2 Nonc ont r ol l i ngi nt e r es ti nt heac qui r e e( 665 , 0 00x 4 0%* ) Pr e vi ous l yhe l de qui t yi nt e r e s ti nt heac qui r e e * * To t a l Fai rval ueofne ti dent i fiabl eas s et sac qui r e d Goodwi l l
266, 000 70, 00 0 686, 000 ( 665, 00 0) 21, 000
*( 1 0 , 0 0 0+5 0 , 0 0 0 )÷1 0 0 , 0 0 0=6 0 %c ont r ol l i ngi nt e r e s t ;( 1 00 % -6 0 %)=4 0 % NCI * *( 1 0 , 0 0 0s h.x₱7 )=7 0 , 0 00
5 .C So l ut i o n:
Cons i der a t i ont r ans f e r r ed NCI Pr e vi ous l yhe l dequi t yi nt e r es t To t a l Fai rval ueofne ti dent i fiabl e as s e t s Goodwi l l( Ne g at i vegoodwi l l )
Pr ovi s i onal 80 0, 000 800 , 000
Adj us t e d 800 , 000 800 , 000 ( a ) ( 72 0, 000)
( 900, 000) ( 100, 00 0)
80, 000
( a )
( 1 . 2 M –2 0 0 K pr ovi s i ona la mt .+20 Kf a i rva l ue-. 3 M)
Fe b . 1 , 2 0x2
Goodwi l l Re t ai nede ar ni ngs * I nt angi bl ea s s e t Fe b . Ac c umul a t edamor t i za t i on 1 , Re t ai nedea r ni ngs
2 0x2
80, 000 100 , 000 7, 500
180 , 000 7, 50 0
* Thi sr e pr e s e nt st her e ve r s aloft he ne g a t i veg o o d wi l lr ec ogni z ed i n pr ofitorl os si n20x1. * * Amor t i za t i onr ec ogni z edi n20 x1 :( 200, 0 00÷10 )x6/12=10, 000; Cor r e c tamor t i za t i oni n20x1:( 20, 00 0÷4)x6/12=2 , 500; Ex c e s samor t i za t i one xpe ns ei n2 0x1=( 10, 000–2, 500)=7, 500...