Beruflich Dokumente
Kultur Dokumente
On January 1, 20x1, Papa Corp. acquired Son Corp. by issuing 5,000 shares for all outstanding shares of Son Corp with
fair value of P500/share and par of P200/share. The financial statements of Papa Corp. and Son Corp. immediately
before the combination are shown below:
P500/share P400/share
1. Prepare Journal Entries to record investment in the books of the acquirer company.
Investment in Son Corp. 2,500,000 Investment in Son Corp. 2,000,000
Share Capital 1,000,000 Share Capital 1,000,000
Share Premium 1,500,000 Share Premium 1,000,000
Additional information:
1. Papa corp. uses FIFO method for inventory valuation.
2. Building has a remaining useful life of 10 years.
3. Equipment has a remaining useful life of 5 years.
4. Bonds payable is payable after 4 years.
P500/share P400/share
1. Prepare Journal Entries to record investment in the books of the acquirer company.
Investment in Son Corp. 2,000,000 Investment in Son Corp. 1,600,000
Share Capital 800,000 Share Capital 800,000
Share Premium 1,200,000 Share Premium 800,000
Acquisition Expense 10,000 Acquisition Expense 10,000
Share Premium 15,000 Share Premium 15,000
Cash 25,000 Cash 25,000