Reference no: EM132699489
Problem - Bertrand Inc. acquired assets and liabilities of Venice Inc. on January 1, 2020. The book value and fair value of Venice's accounts on that date (prior to creating the combination) follow, along with the book value of Bertrand's accounts:
|
Items
|
Bertrand Book Value
|
Venice Book Value
|
Venice Fair Value
|
|
Retained Earnings, 1/120
|
P160,000
|
P240,000
|
|
|
Cash and receivables
|
170,000
|
70,000
|
P70,000
|
|
Inventory
|
230,000
|
170,000
|
210,000
|
|
Land
|
280,000
|
220,000
|
240,000
|
|
Buildings (net)
|
480,000
|
240,000
|
270,000
|
|
Equipment (net)
|
120,000
|
90,000
|
90,000
|
|
Liabilities
|
650,000
|
430,000
|
420,000
|
|
Common Stock
|
360,000
|
80,000
|
|
|
Additional paid in capital
|
20,000
|
40,000
|
|
1. Assume that Bertrand issued 12,000 shares of common stock with a P5 par value and a P47 fair value to obtain all of Venice's outstanding stock. In this transaction how much goodwill should be recognized?
2. Assume that Bertrand issued 12,000 shares of common stock with a P5 par value and a P42 fair value for all of the outstanding shares of Venice. What will be the Additional Paid-in Capital and Retained Earnings after the combination?
3. Assume that Bertrand issued preferred stock a par value of P240,000 and a fair value of P500,000 for all of the net assets of Venice in a business combination. What will be the balance in the Inventory and Land accounts after the business combination?
4. Assume that Bertrand paid a total of P480,000 in cash for all of the shares of Venices. In addition, Bertrand paid P35,000 to a group of attorneys for their work in arranging the combination to be accounted for as an acquisition. What will be the balance in goodwill?