Peter Industries, Inc., entered in a stock acquisition agreement with Honey Chemical Corporation.

Under the t
agreement, Peter Industries issued 180,000 shares of its P1 ordinary shares in exchange for 90% of HCC ordinary sha
Peter Industries shares then were distributed to the shareholders of HCC.
Immediately prior to the combination, HCC's statement of financial position appeared as follows,
Peter Industries HCC FV of HCC over/(under) val - charge to GW
Cash 2,100,000 840,000 840,000
Accounts receivable 420,000 168,000
Allowance for doubtful accounts (21,000) (8,400) 175,560 (15,960)
Trading securities 1,050,000
Inventories 945,000 378,000 453,600 (75,600)
Equipment 3,150,000 1,260,000
Accumulated depreciation - equipment (315,000) (126,000) 1,701,000 (567,000)
Land 6,300,000
Buildings 2,520,000 1,008,000
Accumulated depreciation - buildings (126,000) (50,400) 909,720 47,880
Copyright 210,000
Total assets 16,233,000 3,469,200

Accounts payable 210,000 84,000 84,000

Accrued liabilities 168,000 67,200 67,200
Long-term debt 1,890,000 756,000 907,200 (151,200)
Ordinary shares, P1 per share 200,000 80,000
Share premium 400,000 160,000
Accumulated profits 13,365,000 2,362,000
Treasury shares, P10 per share (40,000)
Total liabilities and shareholder's equity 16,233,000 3,469,200 (761,880)

Consideration transferred
Equity instrument 1,800,000
Cash 1,363,500
Contingent liability 112,500
Total 3,276,000

90% 10%
Controlling Noncontrolling Total
Acquisition cost 3,276,000 364,000 3,640,000
Book value of acquiree's net assets 2,305,800 256,200 2,562,000
Excess of cost over book value 970,200 107,800 1,078,000
Undervaluation of net assets (685,692) (76,188) (761,880)
Goodwill 284,508 31,612 316,120

Investment in Noncontrolling
 subsidiary interest Total
Book value of acquiree's net assets 2,305,800 256,200 2,562,000
Fair value changes (685,692) (76,188) (761,880)
Goodwill 284,508 31,612 316,120
Total 1,904,616 211,624 2,116,240

ELIMINATING ENTRY (ACQUIREE'S BOOKS)

1. Eliminate SHE of acquiree
Ordinary shares 80,000
Share premium 160,000
Accumulated profits 2,362,000
Treasury shares 40,000
Investment in subsidiary 2,305,800
Noncontrolling interest 256,200

2. Undervaluation of net assets

Accounts receivable 7,560
Allowance for doubtful accounts 8,400
Inventories 75,600
Equipment 441,000
Accumulated depreciation - equi 126,000
Accumulated depreciation - buildi 50,400
Long-term debt 151,200
Buildings 98,280
Investment in subsidiary 685,692
Noncontrolling interest 76,188

3. Goodwill
Goodwill 316,120
Investment in subsidiary 284,508
Noncontrolling interest 31,612
3,778,280 3,778,280

ACQUIRER'S BOOKS
Investment in subsidiary 3,276,000
Cash 1,363,500
Contingent liability 112,500
Ordinary shares 180,000
Share premium 1,620,000

Peter
Consideration Post-
 Peter Industries Debit Credit combination
Cash 2,100,000 1,363,500 736,500
Accounts receivable 420,000 420,000
Allowance for doubtful accounts (21,000) (21,000)
Trading securities 1,050,000 1,050,000
Inventories 945,000 945,000
Equipment 3,150,000 3,150,000
Accumulated depreciation - equipment (315,000) (315,000)
Land 6,300,000 6,300,000
Buildings 2,520,000 2,520,000
Accumulated depreciation - buildings (126,000) (126,000)
Copyright 210,000 210,000
Goodwill
Investment in subsidiary 3,276,000 3,276,000
Total assets 16,233,000 18,145,500

Accounts payable 210,000 210,000

Accrued liabilities 168,000 168,000
Long-term debt 1,890,000 1,890,000
Contingent liability 112,500 112,500
Ordinary shares, P1 per share 200,000 180,000 380,000
Share premium 400,000 1,620,000 2,020,000
Accumulated profits 13,365,000 13,365,000
Treasury shares, P10 per share - -
Noncontrolling interest -
Total liabilities and shareholder's equity 16,233,000 18,145,500
orporation. Under the terms of the a.) In addition to the issuance of ordinary shares, Peter Industries will pay c
90% of HCC ordinary shares. The b.) Additional cash of P150,000 will also be transferred to HCC on January 1
and 2016 will exceed P300,000. The probability that the contingent ev
as follows, c.) The appraisal of HCC's identifiable net assets resulted to the following m
under) val - charge to GW
undervaluation = BV < FV Accounts receivable undervalued by
overvaluation = BV > FV Inventories undervalued by
Equipment undervalued by
Buildings overvalued by
Long-term debt overvalued by

d.) All other accounts of HCC have book values equal to their respective fair
e.) The fair value of Peter Industries ordinary shares at date of acquisition is

Give the consolidated balances for the following accounts: (answers witho
1,576,500 Cash
595,560 Accounts receivable
316,120 Goodwill
19,265,500 Total assets
1,398,600 Inventories
3,136,500 Total liabilities
380,000 Ordinary shares, P1 per share
13,365,000 Accumulated profits
16,129,000 Total shareholder's equity
364,000 Non-controlling interest
Undervaluation of net assets
 HCC
Eliminating entries Post- Consolidated
 HCC Debit Credit combination SFP
840,000 840,000 1,576,500
168,000 7,560 175,560 595,560
(8,400) 8,400 - (21,000)
- 1,050,000
378,000 75,600 453,600 1,398,600
1,260,000 441,000 1,701,000 4,851,000
(126,000) 126,000 - (315,000)
- 6,300,000
1,008,000 98,280 909,720 3,429,720
(50,400) 50,400 - (126,000)
- 210,000
316,120 316,120 316,120
3,276,000 (3,276,000) -
3,469,200 1,120,000 19,265,500

84,000 84,000 294,000

67,200 67,200 235,200
756,000 151,200 604,800 2,494,800
112,500
80,000 80,000 - 380,000
160,000 160,000 - 2,020,000
2,362,000 2,362,000 - 13,365,000
(40,000) 40,000 - -
364,000 364,000 364,000
3,469,200 1,120,000 19,265,500
es, Peter Industries will pay cash amounting to P1,363,500.
nsferred to HCC on January 1, 2017 if the average cash flows of HCC in 2015
bability that the contingent event would happen is 75%.
s resulted to the following measurements:

dervalued by 15,960
dervalued by 75,600
dervalued by 567,000
ervalued by 47,880
ervalued by 151,200

equal to their respective fair values

hares at date of acquisition is P10 per share.

ng accounts: (answers without comma and without decimal places)

 Case 1 Case 2
Noncontrolling interest (Full) 140,000 686,000 1
Noncontrolling interest (Partial) 2 117,600 566,720
Controlling interest in the net assets of subsidiary 1,288,000 2,074,800 3
Control premium 28,000 16,800
Allocated excess 840,000 1,646,400 4
Fair value of acquiree's net assets 5 1,176,000 2,266,880 6
Goodwill (Full) 252,000 493,920
Goodwill (Partial) 229,600 374,640 7
Book value of acquiree's net assets 8 588,000 1,114,400
Fair value of subsidiary 1,400,000 2,744,000 9
Acquirer's percentage of ownership 10 90% 75%

Case 1 90% 10%

Controlling Noncontrolling Total
Fair value of net assets of acquiree 1,260,000 140,000 1,400,000
Control premium 28,000 28,000
Acquisition cost 1,288,000 140,000 1,428,000
Book value of acquiree's net assets (529,200) (58,800) (588,000)
Excess of cost over book value 758,800 81,200 840,000
Over/(Under)valuation of net assets (529,200) (58,800) (588,000)
Goodwill 229,600 22,400 252,000

Acquisition cost 1,288,000 140,000 1,428,000

FV of net assets acquired (1,058,400) (117,600) (1,176,000)
Goodwill/ (Bargain purchase gain) 229,600 22,400 252,000

Full Partial Difference

NCI 140,000 117,600 22,400
Goodwill 252,000 229,600 22,400
Write your answers without comma and without decimal numbers
1
2
3
4
5
6
7
8
9
10 ##% - this format

Case 2 75% 25%

Controlling Noncontrolling Total
Fair value of net assets of acquiree 2,058,000 686,000 2,744,000
Control premium 16,800 16,800
Acquisition cost 2,074,800 686,000 2,760,800
Book value of acquiree's net assets (835,800) (278,600) (1,114,400)
Excess of cost over book value 1,239,000 407,400 1,646,400
Over/(Under)valuation of net assets (864,360) (288,120) (1,152,480)
Goodwill 374,640 119,280 493,920

Acquisition cost 2,074,800 686,000 2,760,800

FV of net assets acquired (1,700,160) (566,720) (2,266,880)
Goodwill/ (Bargain purchase gain) 374,640 119,280 493,920

Full Partial Difference

NCI 686,000 566,720 119,280
Goodwill 493,920 374,640 119,280
The consolidated financial statement of Garrison Company immediately after the business combination is as follows
Garrison Company
Consolidated Statement of Financial Position
December 31, 2019
Cash 44,800 Accounts payable
Receivables 53,500 Notes payable
Inventories 64,500 Ordinary shares, P5 par
Property and equipment 225,900 Share premium - OS
Land 679,300 Retained earnings (deficit)
Investment in subsidiary - Treasury shares, P4 per share
Goodwill 140,000 Noncontrolling interest
Total assets 1,208,000

The eliminating entry, using full goodwill approach, prepared by Garrison, to prepare the above financial statement
Land 1,300
Ordinary shares, P5 par 100,000
Share premium - OS 20,000
Goodwill 140,000
Retained earnings 62,500
Receivables 300
Inventories 100
Property and equipment 300
Investment in subsidiary 177,030
Notes payable 1,400
Noncontrolling interest 19,670

Consideration transferred Post-

Garrison Debit Credit combination Morrison
Cash 93,030
Receivables
Inventories
Property and equipment
Land
Investment in subsidiary
Goodwill
Total assets 1,092,730 1,176,730 67,700

Accounts payable 50,400 50,400 3,400

Notes payable 100,800 100,800 6,800
Total liabilities 151,200 151,200 10,200
Ordinary shares, P5 par 280,000 70,000 350,000 100,000
Share premium - OS 56,000 14,000 70,000 20,000
Retained earnings (deficit) 611,130 611,130 (62,500)
Treasury shares, P4 per sh (5,600) (5,600) -
Noncontrolling interest - -
Total shareholder's equity 941,530 1,025,530 57,500
Total liabilities and share 1,092,730 1,176,730 67,700

Controlling Noncontrolling Total

Acquisition cost 177,030 84,500
Book value of acquiree's net assets 57,500
Excess of cost over book value 142,000
Undervaluation of net assets 2,000
Goodwill 140,000

Investment in Noncontrolling
subsidiary interest Total
Book value of acquiree's net assets
Fair value changes
Goodwill 140,000
Total 177,030 19,670 196,700
ombination is as follows: The consideration transferred by Garrison the the former shareholders
Cash
Ordinary shares at P6 per share

53,800 Garrison did not pay any premium nor discount.

109,000 Morrison's liability only includes accounts payable and notes payable th
350,000
70,000 Compute the following: (answers without comma and without decima
611,130 Garrison's total assets in its separate financial state
(5,600) Garrison's total assets in its separate financial state
19,670 Garrison's total liabilities in its separate financial st
1,208,000 Garrison's total shareholder's equity in its separate
Garrison's total shareholder's equity in its separate
ove financial statement is as follows: Number of Morrison ordinary shares acquired by G
Assume that Garrison used proportionate share ap

Eliminating entries Post- Consolidated

Debit Credit combination SFP
44,800
300 53,500
100 64,500
300 225,900
1,300 679,300
177,030 (177,030) -
140,000 140,000 140,000
31,270 1,208,000

3,400 53,800
1,400 8,200 109,000
11,600 162,800
100,000 - 350,000
20,000 - 70,000
 62,500 - 611,130
- - (5,600)
19,670 19,670 19,670
19,670 1,045,200
31,270 1,208,000
the former shareholders of Morrison are as follows:
93,030
84,000

able and notes payable that have a book value of P3,400 and P6,800, respectively.

mma and without decimal numbers)

s separate financial statement prior to business combination
s separate financial statement immediately after business combination
n its separate financial statement prior to business combination
er's equity in its separate financial statement prior to business combination
er's equity in its separate financial statement immediately after business combination
nary shares acquired by Garrison
d proportionate share approach, compute the goodwill
An acquiree has the following information as of the acquisition date.
Book value of identifiable net assets 2,660,000
Fair value assessment of the acquiree's assets and liabilities showed the following:
Over (undervaluation)
Accounts receivable 20,000
Plant assets (40,000)
Bonds payable (100,000)
CASES
I. Acquirer pays P2,194,500 for a 75% ownership of the acquiree.
II. Acquirer pays P2,021,600 for a 80% ownership of the acquiree. The fair value of the noncontrolling interest is P
III. An acquirer exercises significant influence by owning 20% of the acquiree, costing P150,000. At acquisition da
obtains control by purchasing additional 40% of the acquiree's shares for P1,555,600. On the same date, th
previously owned shares is P200,000.
IV. An acquirer purchased 60% of an acquiree's outstanding shares. Consideration includes a control premium eq
its share in the fair value of the acquiree. The fair value of non-controlling interest in P1,080,000.

Based on the cases above, determine the following: (answers without comma and without decimal numbers)
Case PARTIAL GOODWILL FULL GOODWILL
Goodwill/ (Gain) NCI Goodwill/ (Gain) NCI
2 Do not answer Do not answer 26,800 585,200
3 207,600 1,032,000 346,000 1,170,400
4 396,000 1,032,000 444,000 1,080,000

Case 2
Consideration transferred
Cash 2,021,600
80% 20%
Controlling Noncontrolling Total
FV of acquiree's share 2,340,800 585,200 2,926,000
Control premium/ (discount) (319,200) (319,200)
Acquisition cost 2,021,600 585,200 2,606,800
Book value of acquiree's net assets (2,128,000) (532,000) (2,660,000)
Excess of cost over book value (106,400) 53,200 (53,200)
Undervaluation of net assets 64,000 16,000 80,000
Goodwill (42,400) 69,200 26,800

Full NCI 585,200

Goodwill 69,200
Partial NCI 516,000

Case 3
Consideration transferred
Cash 150,000 20% associate (20%)
200,000 20% FV Change subsidary (60%)
1,555,600 40%

Reclassification:
Investment in subsidiary 200,000
Gain on reclassification 50,000
Investment in associate 150,000

60% 40%
Controlling Noncontrolling Total
FV of acquiree's share 1,755,600 1,170,400 2,926,000
Book value of acquiree's net assets (1,596,000) (1,064,000) (2,660,000)
Excess of cost over book value 159,600 106,400 266,000
Undervaluation of net assets 48,000 32,000 80,000
Goodwill 207,600 138,400 346,000

Full NCI 1,170,400

Goodwill 138,400
Partial NCI 1,032,000

Case 4
Consideration transferred
Cash 2,021,600
60% 40%
Controlling Noncontrolling Total
FV of acquiree's share 1,620,000 1,080,000 2,700,000
Control premium/ (discount) 324,000 324,000
Acquisition cost 1,944,000 1,080,000 3,024,000
Book value of acquiree's net assets 1,596,000 1,064,000 2,660,000
Excess of cost over book value 348,000 16,000 364,000
Undervaluation of net assets 48,000 32,000 80,000
Goodwill/ (Bargain purchase gain) 396,000 48,000 444,000

Full NCI 1,080,000

Bargain purchase gain 48,000
Partial NCI 1,032,000
of the noncontrolling interest is P585,200.
ting P150,000. At acquisition date, the acquirer
1,555,600. On the same date, the fair value of the 20%

n includes a control premium equal to 20% of

nterest in P1,080,000.

without decimal numbers)