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    Act131-Prelim Examination: Book Value Fair Value

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    Sittie Ainna Acmed Unte
    APA Company purchased some of JPA Company's outstanding stocks on December 31, 2011 by paying P500,000 in cash and 5,000 shares worth P20 per share. The document provides financial information for APA and JPA as of December 31, 2011 and performance information for 2012-2014. It asks to prepare consolidation working papers and schedules for the business combination under different percentage ownership and measurement assumptions.

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    Act131-Prelim Examination: Book Value Fair Value

    Uploaded by

    Sittie Ainna Acmed Unte
    36 views2 pages
    APA Company purchased some of JPA Company's outstanding stocks on December 31, 2011 by paying P500,000 in cash and 5,000 shares worth P20 per share. The document provides financial information for APA and JPA as of December 31, 2011 and performance information for 2012-2014. It asks to prepare consolidation working papers and schedules for the business combination under different percentage ownership and measurement assumptions.

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    131 Prelim

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    APA Company purchased some of JPA Company's outstanding stocks on December 31, 2011 by paying P500,000 in cash and 5,000 shares worth P20 per share. The document provides financial information for APA and JPA as of December 31, 2011 and performance information for 2012-2014. It asks to prepare consolidation working papers and schedules for the business combination under different percentage ownership and measurement assumptions.

    Copyright:

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

    Act131-Prelim Examination: Book Value Fair Value

    Uploaded by

    Sittie Ainna Acmed Unte
    APA Company purchased some of JPA Company's outstanding stocks on December 31, 2011 by paying P500,000 in cash and 5,000 shares worth P20 per share. The document provides financial information for APA and JPA as of December 31, 2011 and performance information for 2012-2014. It asks to prepare consolidation working papers and schedules for the business combination under different percentage ownership and measurement assumptions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    ACT131-PRELIM EXAMINATION

    On December 31, 2011, the APA Company purchased some of the outstanding stocks of
    JPA Company by paying the following: P 500,000 cash; and 5,000 P10-par-value
    shares with a market value of P20 per share. Book value and fair value data on
    the Statement of Financial Position on December 31, 2011, are as follows:
    APA Company JPA Company
    Book Value Fair Value Book Value Fair Value
    Cash P 2, 300,000 P2,300,000 P 150,000 P 150,000
    Accounts Receivable 200,000 200,000 140,000 140,000
    Land 300,000 300,000 350,000 300,000
    Inventory 750,000 650,000 255,000 300,000
    Building,net 500,000 400,000 300,000 152,000
    Equipment,net 400,000 330,000 260,000 380,000
    TOTAL ASSETS P 4,450,000 P 1,455,000

    Liabilities P 500,000 P 500,000 P 285,000 P 285,000


    Capital Stock 800,000 300,000
    Additional paid in capital 450,000 480,000
    Retained Earnings 2,700,000 390,000
    TOTAL LIAB & SHE P 4,450,000 P 1,455,000

    APA incurred and paid legal and brokerage fees of P12,800 for business
    combination; P6,000 indirect acquisition costs; and P15,000 share issuance costs.
    The remaining life of building and equipment is 2 and 5 years, respectively for
    both companies. Inventories of JPA were sold as follows: 40% in 2012, 40% in 2013
    and 20% in 2014. Below is the summary of the performance of the two companies.

    APA (in pesos) JPA (in pesos)


    2012: Net income 150,000 40,000
    Dividend 20,000 10,000
    2013: Net income 30,000 20,000
    Dividend 20,000 None
    2014: Net Income 50,000 (30,000)
    Dividend - 10,000
    JPA sold the building on January 1, 2013 at a loss of P10,000. On January 1,
    2014, JPA decided to sold the equipment at a profit of P15,000.

    Under the following CASES (use entity approach), answer requirements 1-6:

    A. 100%% ownership; Book Value = Fair Values (ignore Fair Value given) and NCI
    is measured at proportionate interest.
    B. 100% ownership; Book Value not equal FV (consider FV given) and NCI is
    measured at fair value.
    C. 80% ownership; Book Value = Fair Values (ignore Fair Value given) and NCI is
    measured at proportionate interest.
    D. 80% ownership; Book Value not equal FV (consider FV given) and NCI is
    measured at fair value.

    1. Complete the table under CASE D

    12/31/2011 2012 2013 2014


    NCI
    Conso. Income
    Conso. RE
    Conso. Building
    Conso. Accum. Dep.-
    Machine
    Conso. Inventory
    Conso. Working capital
    Conso. Depreciation
    2. Complete Elimination entries for 2011, 2012, 2013 and 2014
    3. Consolidation Working Paper for year 2012 and 2013 under Case B
    4. Distribution and Allocation Schedule for year 2011 under Case A
    5. Amortization of Allocated Excess Schedule for year 2011 and under Case D
    6. Complete Solution for year 2012 and 2013 under case C for the computation of
    Comprehensive Income, Retained Earnings, and NCI.

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