CHAPTER 14

MULTIPLE CHOICE

14-1: a

Purchase price (8,000 shares x P30) P240,000 Direct acquisition cost 4,000 Contingent consideration 5,000 Acquisition cost P249,000

14-2: a

Purchase price P250,000 Direct acquisition cost 50,000 Acquisition cost P300,000 Less: Fair value of net assets acquired 180,000 Goodwill P120,000

14-3: c

Purchase price (100,000 shares x P36) P3,600,000 Direct acquisition cost 100,000 Contingent consideration 20,000 Acquisition cost P3,720,000

14-4: b

Purchase price (600,000 shares x P50) P30,000,000 Direct acquisition cost 300,000 Acquisition cost P30,300,000 Less: goodwill recorded 6,120,000 Fair value of net assets acquired P24,180,000

Capital stock issued (at par) P30,000,000

14-5: c

Purchase price P2,550,000 Legal fees 25,000 Acquisition cost P2,575,000 Less: Fair value of net assets acquired Current assets P1,100,000 Plant assets 2,200,000 Liabilities ( 300,000) 3,000,000 Income from acquisition P( 425,000)

14-6: a (at fair value at date of acquisition)

14-7: d

Abel net income, January to December (P80,000 + P1,320,000) P1,400,000 Cain net income, April to December 400,000 Total net income P1,800,000

14-8: a

Acquisition cost P 800,000 Less: Fair value of net assets acquired Cash P 160,000 Inventory 380,000 Property, plant and equipment 1,120,000 Liabilities ( 360,000) 1,300,000 Income from acquisition P (500,000)

9. a

Acquisition cost P 700,000 Less: Fair value of net assets acquired (P600,000 – P188,000) 412,000 Goodwill P 288,000