Prateroon’s asset has a book value of P10,460,00 and a fair market value of P11,500,000 and the book value of its liabilities amounted to P3,250,000
Prateroon’s asset has a book value of P10,460,00 and a fair market value of P11,500,000 and the book value of its liabilities amounted to P3,250,000 and the fair market value of P4,000,000. Transcribed Image Text: On January 1, 2020 Prateroon Company purchased all the net assets of Stranemon Company consisting of:
> Issuance of 20,000 unissued shares of its P10 par value ordinary share capital. As of this date, the shares of
Prateroon were selling at P40 per share.
> Issuance of bonds with a face value of P300,000 but are currently at 110.
> A contingent payment of P200,000 cash on January 1, 2020, if the average income of Stranemon Company during
the two-year period (2020-2021) exceeds P250,000 per year. Prateroon estimates that there is a 20% chance or
probability that the P200,000 payment will be required.
> Issuance of 5,000 additional shares on January 1, 2022 to the former shareholders of Stranemon Company if the
average income cover the next two years (2020-2021) equalled or exceeded P350,000. The additional 5,000
shares expected to be issued are valued at P75,000.
Professional fees of P9,000 were also paid by Prateroon to its external auditors to finalize the business combination.
As of the date of acquisition, Stranemon Company reported the following book value and current market data:
60,000 Accounts Payable
180,000 Ordinary Share Capital
560,000 Share Premium
440,000 Retained Earnings
Compute the Consolidated Total Liabilities on January 1, 2020. Transcribed Image Text: Selected accounts from the December 31, 2021 trial balances of DEF Corp. and its branch follow:
Shipment from Home Office
Home Office Current
Shipment to branch
Branch merchandise markup
As of December 31, 2021, a shipment with a billing price of P11,000 was in transit to the branch. Freight cost, is
always 5% of the billing price. Merchandise on hand at year-end were: at home office , P64,000 at cost; at branch
P33,000 at billing price and P15,000 purchased from outsiders. Compute the combined net income for 2021.
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