Question

The statement of financial position of Soorkee Company as of December 1, 2011 had book and...

The statement of financial position of Soorkee Company as of December 1, 2011 had book and fair market values as shown below:

Book Value

Fair Value

Current Assets

P240 000

P280,000

Land

20,000

100,000

Building and Equipment (net)

400,000

270,000

Patents

10,000

30,000

Total Assets

P670,000

P680,000

Liabilities

P250,000

P250,000

Ordinary Share Capital

100,000

Accumulated Profits

320,000

430,000

Total Liabilities and Shareholders’ equity

P670,000

P680,000

On December 1, 2011, Pulaskee Company purchased all of Soorkee Company’s share for P600,000.

Required:

  1. Prepare a journal entry on the books of Pulaskee Company to record the share acquisition.
  2. Prepare a schedule showing the determination and allocation of the difference between the consideration given and the book value of interest acquired.
  3. Prepare the consolidated statements worksheet elimination entries.

Homework Answers

Answer #1
Fair value of Assets & Liabilities
Particulars Amount
Current Assets    2,80,000
Non Current Assets
Land    1,00,000
Building & Equipment    2,70,000
Patents        30,000
Total Assets    6,80,000
Liabilities    2,50,000
Total Liabilities    2,50,000
Net Assets    4,30,000
Purchase Consideration    6,00,000
Extra Amount Paid/Goodwill    1,70,000
Accounts Debit Credit
Goodwill    1,70,000
Assets    6,80,000
Liabilities    2,50,000
Cash/Bank    6,00,000
   8,50,000    8,50,000
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