Final Answers should be boxed

Number 1
A. Acquirer- Blackpink
B. Acquiree- Pink Venom
C. The Acquisition was through Asset Acquisition
due to the fact that assets acquired
And liabilities assumed are payable through cash
D.Goodwill/Gain on bargain purchase
Consideration Transferred 2,000,000 Fair Value of Net Identifiable Asset
Non-Controlling Interest-acquiree - FV Asset- 1,450,000
Previously held Equity Interest- acquiree - FV Liabilities- 300,000
Total 2,000,000 FV Net Identifiable Asset- 1,150,00
Fair Value of Net Identifiable Asset acquired* 1,150,000
Goodwill 850,000
E. No, after a business combination, acquiree
will normally cease to exist as a separate legal entity

Number 2
A. Controlling Interest is 75%
B. Goodwill/Gain on bargain purchase
Consideration Transferred 975,000
Non-controlling Interest- acquiree* 325000
Previously Held Equity Interest- acquiree -
Total 1,300,000
Fair Value of Net Identifiable Asset acquired 1,250,000
Goodwill 50,000

*NCI based on its Fair Value- 325000

NCI based on proportionate share-
(1.5M-.250k)x25%=312500
FVNCI is above NCI based on proportionate share thus FVNCI is use
C. Yes, the acquiree will still exist as a separate legal entity
As a subsidiary company of its acquirer called the parent company

Number3
Acquisition Expenses:
Finder's Fee 40,000
Accountant's Fee 10,000
Legal Fee 15,000
Salaries of Employees assigned 16,000
Total Acquisition Expenses: 81,000

*Any cost to issue equity securities are deducted from share premium.
Examples:
Cost of printing stock certificatesa
Audit & Accountant's fee related to stock issuance
SEC Registration Fee
Stock listing application

Number 4
A. Goodwill at Acquiree's NCI's proportionate share in net identifiable asset
Consideration transferred 2,000,000
Non-controlling Interest- acquiree* 600,000
Previously held equity interest- acquiree -
Total 2,600,000
Fair value of net identifiable asset acquired 2,400,000
Goodwill 200,000

Non-controlling Interest- acquiree*

FV Asset-acquiree 4,000,000
FV Liabilities- acquiree 1,600,000
FV of net identifiable asset 2,400,000

2,400,000X25% (100%- controlled interest acquired-75%)= 600,000

B.Goodwill measured at Fair Value

Consideration transferred 2,000,000
Non-controlling Interest- acquiree 600,000
Previously held equity interest- acquiree -
Total 2,600,000
Fair value of net identifiable asset acquired 2,400,000
Goodwill 200,000

Number 5
PURO SATO Adjustments Consolidated
Cash and Cash Equivalents 70,000 90,000 160,000
Inventory 100,000 60,000 160,000
PPE net 500,000 250,000 50,000 800,000
Investment in Sato 260,000 - -
Goodwill 25,000
Total Assets 930,000 400,000 1,145,000

Current Liabilities 180,000 60,000 240,000

Long term Liabilities 200,000 90,000 290,000
Total Liabilities 380,000 150,000 530,000
Common Stock 300,000 100,000 300,000
Retained Earnings 250,000 150,000 250,000
Non-Controlling Interest - 65,000
Total SHE 550,000 250,000 615,000
Total Liabilities & SHE 930,000 400,000 1,145,000
Investment in subsidiary, common stock and retained earnings are eliminated
In consolidated financial position

*Goodwill
Consideration transferred 260,000
*Non-controlling Interest- acquiree 65,000
Previously held equity interest- acquiree -
Total 325,000
Fair value of net identifiable asset acquired 300,000
Goodwill 25,000

*FV NCI *NCI at Acquiree's Proportionate Share

(450,000-150,000)=300,000 (260,000/0.8)x0.20=65,000
300,000x20%=60,000 NCI at Acquiree's Proportionate Share is bigger

Compute for:
1. PPE 800,000
2. Goodwill 25,000
3. Retained Earnings 250,000
4. Total Stockholders' Equity 615,000
5. Non-controlling Interest 65,000
6. Total Liabilities 530,000
7. Total Assets 1,145,000
 Value of Net Identifiable Asset acquired*
Asset- 1,450,000
iabilities- 300,000
Net Identifiable Asset- 1,150,000
Problem 1
Parent Subsidiary
Statement of Comprehensive Income
Sales 200000 100000
Dividend Income 8000 -
Expenses -160000 -70000
Net Income/ CI 48000 30000
NCI in CI
CI to RE 48000 30000

Statement of Retained Earnings

RE, beg 298000 90000
CI fom above 48000 30000
Dividends declared -30000 -10000
RE, end 316000 110000

Statement of Financial Position

Current assets 341000 155000
Noncurrent assets 580000 230000
Investment in S' 160000 -
Total assets 1081000 385000

Current Liabilities 465000 175000

Common stock 300000 100000
RE, from above 316000 110000
NCI in NCA
Total L & E 1081000 385000

Problem 2

Parent Subsidiary
Statement of Comprehensive Income
Sales 1000000 500000
Cost of Sales 400000 150000
Gross Margin 600000 350000
Expenses -360000 -200000
Operating Income 240000 150000
Investment Income 94800 -
Net Consolidated Income 334800 150000
NCI in NC S'
Net Income/ CI 334800 150000
Statement of Retained Earnings
RE, beg 600000 400000
CI fom above 334800 150000
Dividends declared -100000 -50000
RE, end 834800 500000

Statement of Financial Position

Cash 200000 100000
Accounts Reveivable 150000 50000
Inventories 100000 40000
Land 150000 150000
Building 200000 260000
Equipment 700000 490000
Investment in S' 810800 -
Goodwill
Tota Asset 2310800 1090000

Accounts Payable 124000 190000

Accumulated Depreciation -B - 60000
Accumulated Depreciation - E 402000 40000
Common Stock 200000 300000
APIC 400000 -
RE, end 834800 500000
NCI in NA
Total L & E 1960800 1090000

350000
Common Stock
Dr Cr Consolidated

300000
8000 -
5000 -235000
65000
5000 -5000
60000

62000 326000
60000
10000 -30000
356000

10000 486000
50000 860000
160000 -
1346000

10000 10000 640000

100000 300000
356000
2000 52000 50000
1346000
242000 242000

Dr Cr Consolidated FVA
Less: BV of Interest Acquired
1500000 Common Stock
Retained Earnings
Total
Interest Acquired
Book Value
Excess

Allocations (adjustments)
Inventory
Land
Building
Equipment
Excess

E1 Allocation/ Adjustment for Dividends and Increase in Inv

Total Parent Subsidiary
945000 756000 189000

300000
400000
700000 700000 700000
0.8 0.2
560000 140000
245000 196000 49000

-30000 -24000 -6000

-50000 -40000 -10000
 -100000 -80000 -20000
75000 60000 15000
140000 112000 28000

ent for Dividends and Increase in Investment in S'

PROBLEM 1 P S Dr
Statement of Comprehensive Income
Sales 240000 120000
Gain on sale- eqpt 20000 - 20000
Dividend Income 4000 - 4000
COGS -140000 -60000
Depreciation Expense -25000 -15000
Other Expenses -15000 -5000
Net Income/ CI 84000 40000
NCI in CI 6000
CI to RE 84000 40000

Statement of Retained Earnings

RE, beg 294000 105000 69000
CI fom above 84000 40000
Less: Dividends declared -30000 -5000
RE, end 348000 140000

Statement of Financial Position

Current asset
Cash and receivables 113000 35000
Inventory 260000 90000
Noncurrent assets
Land 80000 80000
Buildings & eqpt 500000 150000 5000
Investment in S' 160000 -
Goodwill 50000
Total assets 1113000 355000

Accumulated Depreciation 205000 45000 2000

Liabilities 260000 70000
Common stock 300000 100000 100000
RE, from above 348000 140000
NCI in NA 3000
Total L & E 1113000 355000 259000

Total Parent Subsidiary

FV of S' 200000 160000 40000
Less: BV of Interest acquired
Common stock 100000
Retained Earnings 50000 150000 150000
Multiply by: Interst Acquired 0.8 0.2
Book Value 120000 30000
Excess 50000 40000 10000

Net income, end 40000 RE, beg

Less: Unrealized Intercompany Gain -10000 RE, end
Adjusted Net Income 30000 RE increase
Multiply by: NCI percentage 0.2 Multiply by: NCI %
NCI in comprehensive income 6000 Adjustment to RE

JE Upstream Sale of Land

Dividend Income 4000 Carrying Amount
NCI 1000 Less: Selling Price
Dividends Declared 5000 (Gain on sale)
Multiply by: NCI percentage
Common stock 100000 NCI in NCA attributable
Retained Earnings 50000
Investments in S 120000
NCI 30000 Straight-line Depreciation

Retained Earnings 11000

NCI 11000
Divided by: Remaining useful l
Retained Earnings 8000
NCI 2000 Accumulated Depreciation
Land 10000

Goodwill 50000 Downstream sale of eqpt

Investment in S' 40000
NCI 10000

Gain on Sale - eqpt 20000

Building & Equipment 5000 Gain or loss is adjusted to the controlling interest only.
Accumulated Depreciation(75k/15yrs)*5 25000 NCI is not affected

Accumulated Depreciation 2000

Depreciation Expense 2000

NCI in CI 6000
NCI 6000

PROBLEM 2 Parent Subsidiary Dr

Statement of Comprehensive Income
Sales 800000 600000 265000
Dividend Income 35000 - 35000
Total Revenue 835000 600000
COGS -535000 -400000 11000
Operating Expenses -100000 -100000
Net Income/ CI 200000 100000
NCI in CI 29700
CI to RE 200000 100000

Statement of Retained Earnings

RE, beg 1300000 850000 864400
CI from above 200000 100000
Less: Dividends Declared -100000 -50000
RE, end 1400000 900000

Statement of Financial Position

Cash and receivables 400000 300000
Inventory 298000 700000
Buildings & eqpt 1000000 600000
Investment in S 902000 -
Goodwill 300000
Total Assets 2600000 1600000

Accumulated Depreciation 300000 200000

Liabilities 600000 400000
Common stock 300000 100000 100000
RE from above 1400000 900000
NCI in NA 15000
Total Liabilities & Equity 2600000 1600000 1620100

FV to S' Total Parent Subsidiary

Less: BV of Interest Acquired 1288571.43 902000.00 386571.43
Common Stock 100000.00
Retained Earnings 850000.00
950000.00 950000.00 950000.00
Multiply by: Interest Acquired 0.70 0.30
Book Value 950000.00 665000.00 285000.00
Excess 300000.00 237000.00 101571.43
3857.43

Downstream
Sale Price 120000 Sale Price
Cost 72000 Cost
Gross Profit 48000 Gross Profit
Multiply by: Unsold portion 0.3 Multiply by: Unsold portion
Unrealized GP in EI 14400 Unrealized GP in EI
 Upstream CI to RE
Sale Price 15000 Less: Unrealized GP in EI
Cost 10000
Gross Profit 5000 Multiply by: NCI percentage
Multiply by: Unsold portion 0.2
Unrealized GP in EI 1000 In upstream sale, NCI is affected beacuse the profit pertai
To both the owners: P' and S'
JE
Common stock 100000
Retained Earnings 850000
Investment in S' 665000
NCI in NA 285000

Goodwill 300000
Investment in S' 237000
NCI in NA (300k-237k) 63000

Dividend Income 35000

NCI in NA 15000
Dividend Declared 50000

NCI In CI 29700
NCI in NA 29700
Cr Consolidated

360000
-
-
-200000
2000 -38000
-20000
102000
-6000
96000

330000
96000
5000 -30000
396000

148000
350000

10000 150000
655000
160000 -
50000
1353000

25000 273000
330000
300000
396000
57000 54000
259000 1353000
 50000
105000
55000
0.2
11000

Total Parent Subsidiary

8000
18000
-10000 -10000 -10000
0.8 0.2
8000 2000

Carrying Amount Selling Price Difference

75000 70000
15 10
5000 7000
-2000

Carrying amount 50000

Less: Sale price 70000
Loss/(Gain) 20000
NCI percentage 0.8
Gain attributable to P 16000
usted to the controlling interest only.

Cr Consolidated

1135000
-
1135000
 279400 666600
200000
268400
-29700
238700

1285600
238700
50000 -100000
1424300

700000
11000 987000
1600000
902000 -
300000
3587000

500000
1000000
300000
1424300
377700 362700
1620100 3587000

Downstream
250000
200000
50000
0.2
10000
 100000
1000
99000
0.3
29700
NCI is affected beacuse the profit pertains
ers: P' and S'
sales 2622832
returns 37000
sales-net 2585832 3
2 Sales discoun 41017.18367
AR Discounted 2009842 0.98 2050859.184

Sales -net 2585832 Cash collection 2857960

Less: collections 2050859.1837 Ar discounted 2050859.18
AR-net 534972.81633 AR not discou 807100.816 1

Less: write offs 18700

Less: cash not d 807100.81633
Add: AR beg 546000
AR end 255172 6