Arroyo, Mae Anjeanette B.

BSA51KB1

Assignment in Advanced Accounting II

June 28, 2016

14-9
Avon Corporation issued common stock for the net assets of Bell Corporation in a business
combination.
Market value of the common stock
Par value of common stock
Fair value of Bells assets
Fair value of Bells liabilities

P 700,000
450,000
600,000
188,000

JOURNAL ENTRIES IN THE BOOKS OF AVON CORPORATION AT THE ACQUISITION DATE:

Assets
P 600,000
Goodwill
288,000
Liabilities
P 188,000
Common Stock
450,000
Additional Paid-in Capital
250,000
To record the acquisition of the net assets of Bell Corporation
SUPPORTING COMPUTATIONS:
TO COMPUTE FOR THE GOODWILL:
Consideration paid (MV of common stock)
Fair value of net assets (600,000- 188,000)
Total Goodwill to be recognized

P 700,000
(412,000)
P 288,000

TO COMPUTE FOR THE ADDITIONAL PAID-IN CAPITAL:

Market value of common stock
Par Value of Common
Total Additional Paid-in Capital

P 700,000
(450,000)
P 250,000

Arroyo, Mae Anjeanette B.

BSA51KB1

Assignment in Advanced Accounting II

June 28, 2016

14-14
Rolex Company acquired the net assets of Seiko Company in the transaction properly accounted
for as acquisition by paying cash.
Cash paid
Fair value of Seikos assets:
Cash
Merchandise Inventory
Plant assets
Fair value of Bells liabilities

P 600,000
60,000
142,500
420,000
135,000

JOURNAL ENTRIES IN THE BOOKS OF ROLEX COMPANY AT THE ACQUISITION DATE:

Cash- Seiko Company Account
P 60,000
Merchandise Inventory
142,500
Plant Assets
420,000
Goodwill
112,500
Liabilities
P 135,000
Cash- Rolex Company Account
600,000
To record the acquisition of the net assets of Seiko Company
*Explanation about the not netting of cash account. I did not net the cash account
because the two different cash comes from two different sources. The cash paid of
600,000 is from the Rolex Company, while the cash which is included in the acquired
assets is from the Seiko Company. And to support, I assume that these cash balances are
kept in 2 different banks, thus, it shall be journalized separately. And netting the cash,
would result to credit cash of 540,000 which will not reflect the real transaction happened
which is Rolex Company paying 600,000 (not 540,000) for the acquisition of net assets of
Seiko Company which includes the cash worth 60,000.
SUPPORTING COMPUTATIONS:
TO COMPUTE FOR THE GOODWILL:
Consideration paid
Fair value of net assets (622,500- 135,000)
Total Goodwill to be recognized

P 600,000
(487,500)
P 112,500

Arroyo, Mae Anjeanette B.

BSA51KB1

Assignment in Advanced Accounting II

June 28, 2016

14-15
MM Company issued its common stock for the net assets of PP Company in a business
combination treated as acquisition.
Market value of the common stock
PP Companys net assets

P 1,000,000
800,000

JOURNAL ENTRIES IN THE BOOKS OF ROLEX COMPANY AT THE ACQUISITION DATE:

Net assets
P 800,000
Goodwill
200,000
Paid-in Capital/ Common Stock
P 1,000,000
To record the acquisition of the net assets of PP Company
SUPPORTING COMPUTATIONS:
TO COMPUTE FOR THE GOODWILL:
Consideration paid
Fair value of net assets (622,500- 135,000)
Total Goodwill to be recognized

P 1,000,000
(800,000)
P 200,000

14-16
AA Company issues stock with for the net assets of BB Company in the transaction of business
combination.
Market value of the common stock
Par value of common stock
Fair value of BB Companys net assets
(which includes an equipment of 225,000)

P 600,000
250,000
420,000

JOURNAL ENTRIES IN THE BOOKS OF AVON CORPORATION AT THE ACQUISITION DATE:

Net Assets
Goodwill
Common Stock
Additional Paid-in Capital

P 420,000
180,000
250,000
350,000

Arroyo, Mae Anjeanette B.

BSA51KB1

Assignment in Advanced Accounting II

June 28, 2016

To record the acquisition of the net assets of BB Company

SUPPORTING COMPUTATIONS:
TO COMPUTE FOR THE GOODWILL:
Consideration paid (MV of common stock)
Fair value of net assets
Total Goodwill to be recognized

P 600,000
(420,000)
P 180,000

TO COMPUTE FOR THE ADDITIONAL PAID-IN CAPITAL:

Market value of common stock
Par Value of Common
Total Additional Paid-in Capital

P 600,000
(250,000)
P 350,000