P Company, an SME, issued 120,000 shares of P25 par value ordinary shares for all the outstanding stock of S Company in business consummated on July 1, 2022. P Company's ordinary shares were selling at P40 per share at the time of consummation of the combination. The book value of S net assets was P3.8M. out of pocket costs of combination were as follows: (1) Legal fees for business combination - P12,000 (2) Legal fees for SEC registration - 14,500 (3) SEC registration costs - 18,200 (4) Printing costs of share certificates - 9,400 (5) Finder's fees - 27,000 (6) CPA audit fees for SEC registration in #3 - 19,000 How much is the capitalized cost of investment? *
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- Name Company, an SME, issued 120,000 shares of P25 par value ordinary shares for all the outstanding stock of 5 Company in business consummated on July 1, 2022. Name Company's ordinary shares were selling at P40 per share at the time of consummation of the combination. The book value of Name net assets was P3.8M. out of pocket costs of combination were as follows: (1) Legal fees for business combination - P12,000 (2) Legal fees for SEC registration - 14,500 (3) SEC registration costs - 18,200 (4) Printing costs of share certificates - 9,400 (5) Finder's fees - 27,000 (6) CPA audit fees for SEC registration in #3 - 19,000 Question: How much is the capitalized cost of investment?P Company, an SME, issued 120,000 shares of P25 par value ordinary shares for all the outstanding stock of S Company in business consummated on July 1, 2022. P Company’s ordinary shares were selling at P40 per share at the time of consummation of the combination. The book value of S net assets was P3.8M. out of pocket costs of combination were as follows:(1) Legal fees for business combination - P12,000(2) Legal fees for SEC registration - 14,500(3) SEC registration costs - 18,200(4) Printing costs of share certificates - 9,400(5) Finder's fees - 27,000(6) CPA audit fees for SEC registration in #3 - 19,000How much is the capitalized cost of investment?AAA Co. merged into BBB Corporation on July 1, 2013. In exchange for the net assets at fair market value of AAA Co. amounting to P696,450, BBB issued 68,000 common shares at P9 par value with a market price of P12 per share. Out of pocket costs of the combination were as follows: Legal fees for the contract of business combination P 35,600 Audit fee for SEC registration of stock issue 90,000 Printing costs of stock certificates 14,500 Broker's fee 23,600 Accountant's fee for pre-acquisition audit 80,000 Other direct cost of acquisition General and allocated expense 75,000 43,000 Listing fees in issuing shares 36,000 AAA will pay an additional cash consideration of P455,000 in the event that BBB's net income will be equal or greater than P950,000 for the period ended December 31, 2013. At acquisition date, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be P195,000. Actual net income for the period ended…
- Parent Company, an SME issued 60,000 shares of P100 par value ordinary shares for all the outstanding stock of Sub Company in business combination consummated on January 2, 2022. Parent's ordinary shares were selling at P160/sh at the time of acquisition. The book value of Sub's net assets was P7,600,000. Out of pocket costs of combination were as follows: Legal fees for business combination, P24,000; printing cost for stock certificate, P18,800; finder's fee, P54,000; and CPA audit fee for business combination, P38,000. A contingent consideration that is probable and can be reasonably estimated amounted to P36,400.The total amount to be capitalized as cost of investment in Sub Company is:Parent Company, an SME issued 60,000 shares of P100 par value ordinary shares for all the outstanding stock of Sub Company in business combination consummated on January 2, 2022. Parent's ordinary shares were selling at P160/sh at the time of acquisition. The book value of Sub's net assets was P7,600,000. Out of pocket costs of combination were as follows: Legal fees for business combination, P24,000; printing cost for stock certificate, P18,800; finder's fee, P54,000; and CPA audit fee for business combination, P38,000. A contingent consideration that is probable and can be reasonably estimated amounted to P36,400. The total amount to be capitalized as cost of investment in Sub Company is: * G O 9,752,400 O 9,600,000 O 9,716,000 O 9,636,400Pauline Company acquired 4,000 shares of the outstanding stock of Sophia Company for P1,200,000 on January 1, 2020. Pauline Company also paid P100,000 direct costs related to the combination. On this date, the stockholders equity of Sophia Company consisted of Capital Stock of P500,000, P100 par and Retained Earnings of P600,000. The carrying values of Sophia Company identifiable assets and liabilities are equal to their fair market values. NCI is measured at its proportionate share.On the same date, Pauline Company sold equipment costing P100,000 with accumulated depreciation of P60,000 to Sophia Company for P120,000. Pauline Company was depreciating the equipment for 10 years with no salvage value using the straight-line method and Sophia Company continued the same method. At the end of the year, Pauline Company reported net income of P300,000 and paid dividends of P250,000 while Sophia Company reported net income of P200,000 and paid dividends of P10 per share.The consolidated net…
- P Company acquired all the outstanding shares of S Company by issuing 50,000 shares with a par value of P100 on July 1, 2021. P's ordinary shares were selling at P102 per share at the date of acquisition. On the same date, the net asset of S had a carrying value and fair value of P3,800,000 and P4,500,000 respectively. Out of pocket expenses of the business combination were as follows (see image below). How much is the amount charged to expense? Legal fees for contract of business combination Audit fees for SEC registration of share issue Brokerage fee Accountant fee for pre-acquisition audit Printing and registration of stock certificates Other direct costs of acquisition 41,200 50,000 22,500 35,000 10,000 16,800 General administrative costs 25,000 12,100 Listing fees in issuing new sharesGold Ltd purchased Silver on 1 June 2023, acquiring all of the assets and liabilities. The price agreed on was $60, 000, payable $20, 000 in cash and the balance by the issue to Silver Ltd of 16, 000 fully paid shares in Gold Ltd, these shares having a fair value of $2.50 per share. The balances of the two companies accounts as at 1 June 2023 were as follows: Gold Ltd Silver LtdCash 30,000 -Accounts receivable 8,000 20,000Inventory 14,000 26,000Plant (net) 50,000 30,000Government bonds 12,000 -Goodwill - 10,000Total assets 114,000 86,000Accounts payable 2,000 20,000Retained earnings 12,000 (24,000)Share capital 100,000 90,000Total liabilities and equity 114,000 86,000 All the identifiable net assets of Silver Ltd were recorded by Silver Ltd at fair value except for the inventories, which were considered to be worth $28,000. The plant had an expected remaining life of 5 years. Gold Ltd incurred incidental costs of $500 in relation to the acquisition. Costs of issuing shares in Gold Ltd…On 1 July 2019, Quick Buck Ltd took control of the assets and liabilities of Eldorado Ltd. Quick Buck Ltd issued 80,000 shares having a fair value of $2.40 per share in exchange for the net assets of Eldorado Ltd. The costs of issuing the shares by Quick Buck Ltd cost $1,600. At this date the statement of financial position of Eldorado Ltd was as follows: Carrying amount Fair value Machinery $ 40,000 $ 67,000 Fixtures & fittings 60,0000 68,000 Vehicles 35,000 35,000 Current assets 10,000 12,000 Current liabilities (16,000) (18,000) Total net assets $ 129,000 Share capital (80,000 shares at $1.00 per share) $ 80,000 General reserve 20,000 Retained earnings 29,000 Total equity 129,000 Required:Prepare the journal entries in the records of Quick Buck Ltd at 1 July 2019 for the acquisition.
- Ang Company issued 120,000 shares of its P25 par common stock for the net assets of Chan Corporation in a business combination completed on March 1, 2010. Chan Corporation’s net assets are worth P3,800,000 at FMV. Out of pocket costs of the combination were as follows:Legal fees 26,000Contingent consideration (highly probable & measurable) 18,000Printing costs of stock certificates 8,500Finder’s fees 27,000Professional fees paid to a CPA 21,000Fees paid to company lawyers 23,450Fees paid to company accountants 38,900The goodwill from the business combination is P418,000.How much is the FMV per share of Ang Company at March 1, 2010?…On January 1, 20x4, the Alpha Company entered into a transaction for acquisition of assets and liabilities of Beta Company. Alpha issued P400 in long-term liabilities and 40 shares of ordinary shares having a par value of P1 per share but a fair value of P10 per share. Alpha paid P20 to lawyers, accountants and brokers for assistance in bringing about this purchase. Another P15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Item.. ..Alpha .Beta Cash.. P 180 ..P 40 Accounts Receivable...... 810..180 Inventory... 1,080.. 280 Land. . 600.. 360 Buildings (net).. .1,260.. 440 Equipment (net).. 480... 100 .....- Accounts Payable........( 450)..( 80) Long-term liabilities......(1,290)..( 400) Ordinary Shares, P1 par....( 330) Ordinary Shares, P20 par .( 240) Share Premium.. ( 1,080)..( 340) Retained Earnings.......(1,260).. ( 340) Note: Parentheses indicate a credit balance.Ugly Corp. issued 50,000 shares of P100 par ordinary share for all outstanding shares of Dolls Company in a business combination consummated in July 1, 2019. Ugly’s ordinary shares was selling at P102 per share at the time of the consummation of the combination. Dolls’ net asset on the date of acquisition has a carrying amount of P3,800,000. Out of pocket expenses of the combination were as follows:Legal fees P50,000Finder’s fees 25,000CPA audit fees 50,000Printing of stock certificates 65,000Determine the amount charged to expense: