Assets

Beg. 100,000.00
FV of acquired 10,000.00 Payment 5,000.00
GW 1,000.00
Consolidated assets 106,000.00

Consolidated Assets
BV of parent (Beg.) XX
FV of identifiable assets acquired XX Payment using assets XX
GW acquired XX
Consolidated Assets
 Liabilities
Beg. 40,000.00
Assumed 3,000.00
Conso 43,000.00

Conso Liab
BV of parent (Beg.) XX
BIC XX Assumed from S @ FV XX
Unpaid items (PP & Costs) XX
Consolidated Liab XX

Contingent considerations - part of unpaid items

INCLUDE IF FAIR VALUE CAN BE DETERMINED
 Equity
Beg. 60,000.00
Issuance 3,000.00
Conso 63,000.00

Conso Equity
BV of parent (Beg.) XX
Expenses XX Share issuance @ FV XX
NCI**** XX
SIC XX Gains XX
Conso Equity XX

Gains:
Gain on bargain purchase
Gain on PHI (previously held interest)
Beg Balances (prior to acquisition)
Asset 100,000.00
Liabilities 40,000.00
Equity 60,000.00

Company purchased assets with FV of P10,000, assumed liabilities of P3,000

By paying cash P5,000 and issuing shares worth P3,000

PP
Cash 5,000.00
Shares 1,000.00 6,000.00
FVNIA
FV of assets 10,000.00
Liabilities (3,000.00) (7,000.00)
Goodwill (1,000.00)

Journal entry: (acquisition method)

Identifiable Assets (@ FV) 10,000.00
Goodwill -
Gain
Liabilities
Cash
Share capital
10,000.00
Sobra binayad (kasi special siya)
Ano special sa kanya? Ang hirap isagot (unidentifiable)

1,000.00
3,000.00
5,000.00
1,000.00
10,000.00
Problem 1: If may GW sa SFP ng acquiree,
Current Assets 1,170,000.00 disregard kasi we only include identifiable
Land 12,600,000.00 Dahil, we will compute a new GW
Building 6,840,000.00
Equipment 3,150,000.00
FV of identifiable assets 23,760,000.00
FV of liabilities assumed (3,150,000.00)
FVNIA 20,610,000.00 Tang, Alger:
Initial NCI

Total Parent NCI

Consideration/PP 23,000,000.00 18,000,000.00 5,000,000.00
FVNIA (20,610,000.00) (16,488,000.00) (4,122,000.00)
GW (Gain) 2,390,000.00 1,512,000.00 878,000.00
Tang, Alger:
NCI can only recognize
GW (bawal gain on
bargain purchase);
IFRS 3, initial NCI can be measured using if gain, use prop share

1. Fair value @ date of acquisition (full GW approach); or

2. Proportionate share in the net identifiable assets (partial GW approach kasi GW of NCI is not recog))

IFRS 3, gain on bargain purchase shall be attributable to the acquirer

Acquisition method entries (not recorded)

Identifiable assets 23,760,000.00
GW 2,390,000.00
Liabilities 3,150,000.00
NCI 5,000,000.00
Cash 18,000,000.00
26,150,000.00 26,150,000.00

Actual entries (if acquisition of stocks), books of P

Investment in Subsidiary 18,000,000.00
Cash 18,000,000.00

Books of S
No entry

WPEE
Objectives:
1. Eliminate the equity of Subsidiary at date of acquisition
2. Eliminate the investment in Subsidiary
3. Recognize FV adjustments of assets and liabilities at date of acquisition
4. Recognize GW or gain on bargain purchase
5. Recognize NCI
OSC - Subsidiary 5,400,000.00
SP - Subsidiary 4,950,000.00
RE - Subsidiary 2,700,000.00
Land 4,680,000.00 Undervalued land
Building 2,880,000.00 Undervalued building
GW 2,390,000.00
Investment in Subsidiary 18,000,000.00
NCI 5,000,000.00
23,000,000.00 23,000,000.00

Requirement 2:
Total P NCI
PP 22,122,000.00 18,000,000.00 4,122,000.00 Since magiging gain on BP kay NCI, u
FVNIA (20,610,000.00) (16,488,000.00) (4,122,000.00)
GW (Gain) 1,512,000.00 1,512,000.00 - Proportionate kasi nag-negative

Requirement 3:
T P NCI
PP - without control premium 17,010,000.00 12,888,000.00 4,122,000.00 At fair value, since no FV given, we w
PP - control premium 5,112,000.00 5,112,000.00
FVNIA (20,610,000.00) (16,488,000.00) (4,122,000.00)
GW (Gain) 1,512,000.00 1,512,000.00 - Proportionate kasi nag-negative

Requirement 4:
T P NCI
PP - without control premium 22,149,000.00 18,000,000.00 4,149,000.00
PP - control premium 276,000.00 276,000.00
FVNIA (20,610,000.00) (16,488,000.00) (4,122,000.00)
GW (Gain) 1,815,000.00 1,788,000.00 27,000.00 Pwede kasi positive

Requirement 5:
T P NCI
PP - without control premium 20,790,000.00 16,668,000.00 4,122,000.00 Acquirer elected to measure at propo
PP - control premium 1,332,000.00 1,332,000.00
FVNIA (20,610,000.00) (16,488,000.00) (4,122,000.00)
GW (Gain) 1,512,000.00 1,512,000.00 -

OSC - Subsidiary 5,400,000.00

SP - Subsidiary 4,950,000.00
RE - Subsidiary 2,700,000.00
Land 4,680,000.00 Undervalued land
Building 2,880,000.00 Undervalued building
GW 1,512,000.00
Investment in Subsidiary 18,000,000.00 Including control premium
NCI 4,122,000.00
22,122,000.00 22,122,000.00
de identifiable

ng, Alger:
tial NCI
giging gain on BP kay NCI, use proportionate share

onate kasi nag-negative

lue, since no FV given, we will assume the FV (12,888,000 is for 80%, compute the 20%)

onate kasi nag-negative

elected to measure at proportionate share

 AAA BBB
Assets @ CV 61,500,000.00 18,345,000.00 Cash
UV (OV) 100,000.00 (150,000.00) FV of shares issued
FV of identifiable assets 61,600,000.00 18,195,000.00 Total PP
FV of liabilities (16,650,000.00) (4,800,000.00)
FVNIA 44,950,000.00 13,395,000.00

AAA
T P NCI (0%)
PP 143,650,000.00 143,650,000.00 -
FVNIA (44,950,000.00) (44,950,000.00) -
Goodwill 98,700,000.00 98,700,000.00 -

BBB
PP 39,824,000.00
FVNIA (13,395,000.00)
GW 26,429,000.00

Total GW acquired 125,129,000.00 1.

Journal entry:
Identifiable assets 79,795,000.00
GW 125,129,000.00
Liabilities 21,450,000.00
Cash 1,662,000.00
Share capital 159,085,500.00
Share premium 22,726,500.00
204,924,000.00 204,924,000.00

Expenses 1,170,000.00
Share premium/SIC 5,565,000.00 SIC is a contra-equity account
Payable 6,735,000.00

Dr. Identifiable assets 79,795,000.00

Cr. Cash (1,662,000.00) Cash is identifiable
Net increase 78,133,000.00 2.

Cr. Liabilities 21,450,000.00

Cr. Payable 6,735,000.00
Net increase 28,185,000.00 3.

FV of shares issued 181,812,000.00 Share capital and share premium

SIC (5,565,000.00) 5.
Expenses (1,170,000.00) 6.
Gains -
Net increase 175,077,000.00 4.

Checks:
Increase in identifiable ass 78,133,000.00
Increase in GW 125,129,000.00
Total increase 203,262,000.00 Net increase in asset

Increase in liab 28,185,000.00

Increase in equity 175,077,000.00
Total increase 203,262,000.00
AAA BBB
1,210,000.00 452,000.00
142,440,000.00 39,372,000.00
143,650,000.00 39,824,000.00
BVNA 1,500,000.00 Book value of net assets of acquiree
OV - Building (50,000.00) If asset is overvalued, equity is overvalued
UV - Equipment 80,000.00 If asset is undervalued, equity is undervalued
OV - Liability 60,000.00 If liability is overvalued, equity is undervalued
FVNIA 1,590,000.00

T P (85%) NCI (15%)

PP 1,238,500.00 1,000,000.00 238,500.00 Since acquirer did not elect, we use FV nalang (1M divide
FVNIA (1,590,000.00) (1,351,500.00) (238,500.00)
GW (Gain) (351,500.00) (351,500.00) - Proportionate kasi nag-negative

1. NCI = 238,500 (proportionate kasi nag-negative)

2. Gain 351,500
use FV nalang (1M divided by 85% times 15%)
FV of identifiable assets 2,189,000.00 Cash 3,600,000.00
FV of liabilities (983,000.00) Contingent 50,000.00
FVNIA 1,206,000.00 PP without CP 3,650,000.00

As of 1/1/2025
T P (90%) NCI (10%)
PP - without CP 3,770,600.00 3,650,000.00 120,600.00
PP - control premium 30,000.00 30,000.00
FVNIA (1,206,000.00) (1,085,400.00) (120,600.00)
GW 2,594,600.00 2,594,600.00 -

Acquisition method entries: (assumed)

FV of identifiable assets 2,189,000.00
GW 2,594,600.00
Liabilities 983,000.00
Cash 3,630,000.00 Including CP
Estimated liab (CC) 50,000.00
NCI 120,600.00
4,783,600.00 4,783,600.00

As of 12/5/2025
T P (90%) NCI (10%)
PP - without CP 3,780,600.00 3,660,000.00 120,600.00
PP - control premium 30,000.00 30,000.00
FVNIA (1,206,000.00) (1,085,400.00) (120,600.00)
GW 2,604,600.00 2,604,600.00 -

Acquisition method entries: (assumed)

Goodwill 10,000.00 Retrospective because within measurement period (
Estimated Liab (CC) 10,000.00 If beyond measurement period, adjust thru gain or l

Acquisition costs
Expense (90K + 50K + 60K) 200,000.00
Cash 110,000.00
Liabilities 90,000.00

Consolidated Assets
Beginning 8,750,000.00
FV of identifiable 2,189,000.00 Cash - PP 3,630,000.00
GW (updated) 2,604,600.00 Cash - Costs 110,000.00
Consolidated Assets 9,803,600.00

Consolidated Liabilities
Beginning 2,075,000.00
 Assumed from S 983,000.00
Unpaid - PP 60,000.00 Contingent (updated)
Unpaid - Costs 90,000.00
Consolidated Liabilities 3,208,000.00

Consolidated Assets - Consolidated Liabilities 6,595,600.00 Conso Equity

Consolidated Equity
Beginning 6,675,000.00
FV of shares issued -
Expenses 200,000.00 Gains -
NCI 120,600.00
Consolidated Equity 6,595,600.00
 e within measurement period (adjust thru GW or gain on BP)
ent period, adjust thru gain or loss (P/L)
tingent (updated)

Cash beg 3,541,500.00

Acquired 128,000.00
Paid (3,740,000.00)
Cash, end (70,500.00)
Step-acquisition: You have investment before (but without control), then you added more shares and obtained control

RULE:
Update the PHI (previously held interest) to FV on date of acquisition (this forms part of PP)

Investment @ cost 570,000.00

Cash 570,000.00
(30% ownership)

If FV of PHI is not given, we will assume using the new acquisition as basis
50% shares for 1,620,000
30% shares = ? (assumed FV) P972,000

From 570,000 to 972,000, increase of P402,000

Investment @ cost 402,000.00

Gain - P/L 402,000.00 IF FVOCI classification, recognize in OCI (then transfer to RE); If not F

Investment in S 2,592,000.00 Purchase price of the parent

Investment @ cost 972,000.00
Cash 1,620,000.00

FV of identifiable assets 2,100,000.00

FV of liabilities (600,000.00)
FVNIA 1,500,000.00

T P (80%) NCI (20%) Cash

PP 3,092,000.00 2,592,000.00 500,000.00 FV of PHI
FVNIA (1,500,000.00) (1,200,000.00) (300,000.00) PP of Parent
GW 1,592,000.00 1,392,000.00 200,000.00
more shares and obtained control

nize in OCI (then transfer to RE); If not FVOCI, recognize in P/L

1,620,000.00
972,000.00
2,592,000.00
Accounting for business combination SMEs:
Difference:
1. Measurement of NCI:proportionate share ONLY (partial GW)
2. Direct acquisition costs are not expensed but capitalized (except for costs to issue and register)
What do we mean by capitalized? It means that direct acquisition costs form of PP of parent

Cash paid XX
FV of shares issued XX
FV of liab issued XX
Direct acquisition costs XX
Total PP of Parent XX