Reference no: EM132697992
Problem - RICE Company has gained control over the operations of PALAY Corporation by acquiring 85% of its outstanding capital stock for P 2,580,000. This amount includes a control premium of P30,000. Acquisition expenses paid, direct and indirect, amounted to P83,000 and P42,000 respectively. Book values as of the balance sheet date are shown below:
|
|
RICE
|
PALAY
|
|
Cash
|
P3,541,500
|
P128,000
|
|
Accounts receivable
|
300,000
|
325,000
|
|
Inventories
|
550,000
|
360,000
|
|
Prepaid expenses
|
148,500
|
125,000
|
|
Land
|
2,350,000
|
879,000
|
|
Building
|
1,560,000
|
558,000
|
|
Equipment
|
300,000
|
185,000
|
|
Goodwill
|
-
|
300,000
|
|
Total assets
|
P8,750,000
|
P2,860,000
|
|
Accounts Payable
|
675,000
|
253,000
|
|
Notes Payable
|
1,400,000
|
730,000
|
|
Capital stock, 50 par
|
3,400,000
|
800,000
|
|
APIC
|
1,575,000
|
600,000
|
|
Retained earnings
|
1,700,000
|
477,000
|
|
Total equities
|
P8,750,000
|
P2,860,000
|
The following was ascertained on the date of acquisition:
The value of receivables and equipment has decreased by P25,000 and P14,000 respectively.
The fair value of inventories is now P436,000 whereas the value of land and building has increased by P471,000 and P107,000 respectively.
There was an unrecorded accounts payable amounting to P27,000 and the carrying value of notes is P738,000.
All identifiable assets not mentioned above are worthless.
Required - Compute for the following balances to be presented in the consolidated statement of financial position at the date of business combination:
1. Inventories.
2. Goodwill
3. Total assets
4. Total liabilities
5. Total shareholder's equity
6. Non controlling interest