Reference no: EM132813822
Question - Blue Co. merged into Soda Corp. on June 30, 2016. In exchange for the net assets at fair market value of Blue Co. amounting to P2,785,800, Soda issued 68,000 ordinary shares at P36 par value, with a market price of P41 per share. Relevant data on ordinary shareholders' equity immediately before the combination show:
Soda Blue
Share Capital 8,790,000 2,030,000
Share Premium 3,834,000 782,000
Retained Earnings (Deficit) (1,516,000) 495,000
Out of pocket costs of the combination were as follows:
Legal fees for the contract of business combination 174,700.
Audit fee for SEC registration of stock issue 198,400.
Printing costs of stock certificates 144,900.
Broker's fee 135,000.
Accountant's fee for pre-acquisition audit 161,000.
Other direct cost of acquisition 90,400.
General and allocated expenses 115,300.
Listing fees in issuing new shares 172,000.
Included as part of the acquisition agreement is the additional cash consideration of P163,000 in the event Soda Co.'s share price will reach P32 per share by year-end.
At acquisition date, the share price is P27.50, and increased by P4,80 by December 31, 2106. ? At acquisition date, there was only a low probability of reaching the target share price, so the fair value of the additional consideration was determined at P74,000.
Required - What is the amount of expense to be recognized in the statement of comprehensive income for the year ended December 31, 2016?
a. 676,400
b. 851,700
c. 765,400
d. 940,700