Reference no: EM132765395
ABC Corp. issued 120,000 shares of P25 par ordinary share for all outstanding shares of XYZ in a business combination consummated on July 1, 2020. ABC's ordinary share was selling at P36 per share at the time of the consummation of the combination. XYZ's net asset is P3.9 million at book value.
Out of pocket expenses of the combination were as follows:
Legal Fees:
For business combination 15,000
For SEC registration 14,000
SEC registration costs 18,000
Printing costs of share certificates 9,000
Finder's fee 28,000
CPA audit fee for SEC registration 12,000
Required:
Question 1. If the combination is treated as acquisition method, what is the total amount of the cost of investment?
Question 2. Assuming ABC Corp. is an SME, what is the total amount of the cost of investment?