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    Let's Analyze: Pacalna, Anifah B

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    Anifahchannie Pacalna
    This document provides information about the acquisition of Sotto Company by Pedro Company. Pedro Company paid ₱950,000 cash for 80% of Sotto's common stock. The document includes: 1) A journal entry on Pedro's books to record the acquisition. 2) A determination and allocation of excess schedule that calculates goodwill of ₱190,000. 3) Working paper elimination entries to eliminate Sotto's equity accounts against the investment account and non-controlling interest, and to allocate excess to identifiable net assets.

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    Let's Analyze: Pacalna, Anifah B

    Uploaded by

    Anifahchannie Pacalna
    231 views2 pages
    This document provides information about the acquisition of Sotto Company by Pedro Company. Pedro Company paid ₱950,000 cash for 80% of Sotto's common stock. The document includes: 1) A journal entry on Pedro's books to record the acquisition. 2) A determination and allocation of excess schedule that calculates goodwill of ₱190,000. 3) Working paper elimination entries to eliminate Sotto's equity accounts against the investment account and non-controlling interest, and to allocate excess to identifiable net assets.

    Original Description:

    GARCIA

    Original Title

    GARCIA_ACP312_ULOc_LETS-ANALYZE

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    This document provides information about the acquisition of Sotto Company by Pedro Company. Pedro Company paid ₱950,000 cash for 80% of Sotto's common stock. The document includes: 1) A journal entry on Pedro's books to record the acquisition. 2) A determination and allocation of excess schedule that calculates goodwill of ₱190,000. 3) Working paper elimination entries to eliminate Sotto's equity accounts against the investment account and non-controlling interest, and to allocate excess to identifiable net assets.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    231 views2 pages

    Let's Analyze: Pacalna, Anifah B

    Uploaded by

    Anifahchannie Pacalna
    This document provides information about the acquisition of Sotto Company by Pedro Company. Pedro Company paid ₱950,000 cash for 80% of Sotto's common stock. The document includes: 1) A journal entry on Pedro's books to record the acquisition. 2) A determination and allocation of excess schedule that calculates goodwill of ₱190,000. 3) Working paper elimination entries to eliminate Sotto's equity accounts against the investment account and non-controlling interest, and to allocate excess to identifiable net assets.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    PACALNA, ANIFAH B.

    Let’s Analyze

    Activity 1. On January 1, 2020 statement of financial position of Sotto Company at book and market
    values are as follows:

    Book value Fair value


    Current assets 800,000 750,000
    Property and equipment (Net) 900,000 1,000,000
    Total assets 1,700,000 1,750,000

    Current liabilities 300,000 300,000


    Long-term liabilities 500,000 460,000
    Common stock, P1 par 100,000
    Additional paid in capital 200,000
    Retained earnings 600,000
    Total liabilities and equity 1,700,000

    Pedro Company paid P950,000 in cash for 80% of Sotto Company's common stock. Pedro Company also
    paid of professional fees to effect the combination. The fair value of the NCI is assessed to be P230,000.

    Required:
    1. Prepare journal entry on Pedro Company's books to record the acquisition of the Sotto Company's
    stock.

    Investment in Sotto Company 950,000


    Cash 950,000
    To record the acquisition of Sotto’s Stock

    2. Prepare a determination and allocation of excess schedule.

    Pedro Sotto
    Fair Value
    (80%) (20%)
    ₱1,180,00
    Fair Value of subsidiary 950,000 230,000
    0
    Less: Book value of interest acquired
    Common stock 100,000
    APIC 200,000
    Retained earnings 600,000
    Total equity ₱900,000 900,000 900,000
    Interest acquired 80% 20%
    Book value 720,000 180,000
    Excess ₱280,000 230,000 50,000
    Adjustment of Identifiable Net Assets:
    Currents assets 50,000
    PPE (Net) (100,000)
    Current liabilities -
    Long-term liabilities (40,000)
    Goodwill ₱190,000

    3. Prepare the working paper elimination entries.

    Common stock – Sotto Company 100,000


    Additional paid-in Capital– Sotto Company 200,000
    Retained earnings – Sotto Company 600,000
    Investment in Sotto Company 720,000
    Non-controlling Interest 180,000
    To eliminate subsidiary equity accounts against investment account (80%) and NCI account (20%)

    Property and equipment (Net) 100,000


    Long-term liabilities 40,000
    Goodwill 190,000
    Current assets 50,000
    Investment in Sotto Company 230,000
    Non-controlling Interest 50,000
    To allocate excess

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