1 A

2 C
3 E
4 B
5 A
6 B
7 A
8 C
9 A
10 A
11 B
12 A
13 C
14 A
15 A
16 D
17 A
18 B
19 D
Fair value of Assets of Entity B 1,800,000.00 (1,300,000 + 1,500,000)
Less: Fair value of Liabilities of Entity B 1,100,000.00 (600,000+500000)
Fair Value of Net Assets 700,000.00

Fair Value of Shares 200,000.00 (10,000 *20)

Fair Value of Bonds 550,000.00 (500,000 * 1.1)
Consideration Given 750,000.00

Identity Parent NCI Total

Consideration Given 750,000.00 - 750,000.00
Fair Value of Net Assets 700,000.00 - 700,000.00
Goodwill ( Gain on acquisition) 50,000.00 50,000.00

Acquisition related cost 40,000.00

Indirect Cost 30,000.00
Total 70,000.00

Total Assets before acquisition 3,000,000.00 (1,000,000 + 2,000,000)

Net Assets of Entity B(at fair value) 1,800,000.00
Goodwill 50,000.00

Less: Cash paid for total acquisition related

cost,Indirect cost, share and bond issue cost 100,000.00 (40K + 30K +20K +10K)
Total Assets after acquisition 4,750,000.00

Total Liabilities before acquisition 500,000.00 (200K + 300K)

Net Liabilities of Entity B(at fair value) 1,100,000.00
Bond payables issued 550,000.00
Less: bond issue cost (considered as
deduction to bond premium) 20,000.00
Total Liabilities after acquisition 2,130,000.00
Problem 2
For item no.1
Fair value of Assets of Entity B 3,960,000.00 (195000+2100000+660000+480000+525000)
Less: Fair value of Liabilities of Entity B 525,000.00
Fair Value of Net Assets 3,435,000.00

Cash given 3,000,000.00

Consideration Given 3,000,000.00

Note: Since the problem is silent, the consideration given for the NCI will be based on the proportionate amount of what the parent has given, in short, we'll gross
up the amount paid by the parent but first, we'll need to minus the control premium paid by the parent. Also, you need to check whether the amount is lesser
than the proportionate fair value of net assets of NCI because there are no gain on acquisition for the NCI, thus if what you get was lower, then you can just use
the fair value of net assets proportionate to the NCI.

Consideration Given by Parent 3,000,000.00

Control Premium 852,000.00
w/out CP 2,148,000.00
To gross up 2,685,000.00
Proportionate amount 537,000.00 20%

*This is the one to be used as it the proportionate amount

based on fair value of the consideration given was lower than
FVNA of NCI 687,000.00 that of FVNA

Identity Parent NCI Total

Consideration Given 3,000,000.00 687,000.00 3,687,000.00
Fair Value of Net Assets-80% 2,748,000.00 687,000.00 3,435,000.00
Goodwill ( Gain on acquisition) 252,000.00 - 252,000.00

For item no.2

Cash given 3,138,000.00 (3000000+138000)
Consideration Given 3,138,000.00

Identity Parent NCI Total

Consideration Given 3,138,000.00 736,500.00 3,874,500.00
Fair Value of Net Assets 2,748,000.00 687,000.00 3,435,000.00
Goodwill ( Gain on acquisition) 390,000.00 49,500.00 439,500.00
Net Assets 1,600,000.00
Less: Overvaluation of Asset 60,000.00
Less: Undervaluation of Liabilities 40,000.00
Fair Value of Net Assets 1,500,000.00

Note: Since the problem is silent, the consideration given for the NCI will be based on the proportionate amount of what the parent has given, in short,
we'll gross up the amount paid by the parent. Also, you need to check whether the amount is lesser than the proportionate fair value of net assets of NCI
because there are no gain on acquisition for the NCI, thus if what you get was lower, then you can just use the fair value of net assets proportionate to the
NCI.

Consideration Given by Parent 1,000,000.00

To gross up 1,250,000.00
Proportionate amount 250,000.00
FVNA of NCI 300,000.00 *This is the one to be used as it the proportionate amount based on fair value of the consideration given was lo

Identity Parent NCI Total

Consideration Given 1,000,000.00 300,000.00 1,300,000.00
Fair Value of Net Assets 1,200,000.00 300,000.00 1,500,000.00
Goodwill ( Gain on acquisition) - 200,000.00 - - 200,000.00
f the consideration given was lower than that of FVNA
Fair value of Assets of Entity B 1,188,000.00
Less: Fair value of Liabilities of Entity B 90,000.00
Fair Value of Net Assets 1,098,000.00

Consideration Given by Parent 820,800.00

FVNA of NCI 219,600.00 219,600.00

Identity Parent NCI Total

Consideration Given 820,800.00 219,600.00 1,040,400.00
Fair Value of Net Assets 878,400.00 219,600.00 1,098,000.00
Goodwill ( Gain on acquisition) - 57,600.00 - - 57,600.00

Retained Earnings 4,860,000.00

Gain on acquisition 57,600.00
Adjusted Retained Earnings 4,917,600.00

Share Capital 900,000.00

Share Premium 2,700,000.00
Adjusted Retained Earnings 4,917,600.00
NCI 219,600.00
Total Equity 8,737,200.00

Consideration Given by Parent 1,458,000.00

To gross up 1,620,000.00
Proportionate amount 162,000.00 *This is the one to be used as it the proportionate amount based on fair value of the consideration given was higher than that of FVNA
FVNA of NCI 109,800.00

Identity Parent NCI Total

Consideration Given 1,458,000.00 162,000.00 1,620,000.00
Fair Value of Net Assets 988,200.00 109,800.00 1,098,000.00
Goodwill ( Gain on acquisition) 469,800.00 52,200.00 522,000.00

Total Assets of Arden 9,000,000.00

Fair Value of Wonder Co. Assets 1,188,000.00
Goodwill 522,000.00
Less: Investment on subsidiary 1,458,000.00
Total consolidated assets 9,252,000.00
Initial Purchase using Equity Method 1,890,000.00 540,000+ 1,350,000
Allocation of Net Loss since it's equity method 270,000.00 *This will be reflected on the Retained Earnings as it is a profit and l
Value before the additional investment 1,620,000.00 900,000* .30
Fair Value of the 30% Investment 1,971,000.00 (3,942,000/.60*.30)
Gain on Remeasurement of investment 351,000.00 *This will be reflected on the Retained Earnings as it is a profit and l

60% investment 3,942,000.00

30% Investment 1,971,000.00
Total consideration given 5,913,000.00

FVNA of NCI 828,000.00

Fair value of Assets of Entity B 11,520,000.00

Less: Fair value of Liabilities of Entity B 3,240,000.00
Fair Value of Net Assets 8,280,000.00

Identity Parent NCI Total

Consideration Given 5,913,000.00 828,000.00 6,741,000.00
Fair Value of Net Assets 7,452,000.00 828,000.00 8,280,000.00
Goodwill ( Gain on acquisition) - 1,539,000.00 - - 1,539,000.00

Goodwill -
Gain on Acquisition - 1,539,000.00
*note: Do not offset

Total adjustment to Retained Earnings

Gain on Acquisition 1,539,000.00
Gain on Remeasurement of investment 351,000.00
Net Loss 270,000.00
Direct Cost 239,400.00 90,000+72,000+77,400
Indirect Cost 84,600.00 64,800+19800
Total inrease on the Retained Earnings 1,296,000.00

Total SHE before acquisition 7,308,000.00

Shares Issued 1,350,000.00
Adjustments to Retained Earnings 1,296,000.00
NCI 828,000.00
Consolidated Equity 10,782,000.00
arnings as it is a profit and loss item

arnings as it is a profit and loss item

Acquisition related Cost
Legal Fees 174,700.00
Broker's Fees 135,000.00
Accountant Fees 161,000.00
Other direct cost 90,400.00
General and allocated Expenses 115,300.00
Listing Fees 172,000.00
Total 848,400.00

Total ARC 848,400.00

Adjustment to contingent liability as it's

not within the measurement period
resulting to expense rather than an
adjustment to Goodwill or Gain 89,000.00 163,000-74,000
Total Expenses 937,400.00