The statement of financial position of Soorkee Company as of December 1, 2011 had book and fair market values as shown below:
Book Value |
Fair Value |
||
Current Assets |
P240 000 |
P280,000 |
|
Land |
20,000 |
100,000 |
|
Building and Equipment (net) |
400,000 |
270,000 |
|
Patents |
10,000 |
30,000 |
|
Total Assets |
P670,000 |
P680,000 |
|
Liabilities |
P250,000 |
P250,000 |
|
Ordinary Share Capital |
100,000 |
||
Accumulated Profits |
320,000 |
430,000 |
|
Total Liabilities and Shareholders’ equity |
P670,000 |
P680,000 |
On December 1, 2011, Pulaskee Company purchased all of Soorkee Company’s share for P600,000.
Required:
1.journal entry in the books of pulaskee company
S. No Particulars Debit (p) Credit(p)
1. Current assets a/c dr. 280000
Land a/c Dr. 100000
Building and equipment 270000
Parents a/c 30000
Goodwill a/c 170000
Liabilites a/c 250000
Soorkee company a/c 600000
(Being pulaskee company taking over the assets and liabilites at fairvalue)
2. Sorkee company a/c Dr. 600000
To bank a/c 600000
(Being cash paid of p 600000 for the acuisition of soorkee company)
Schedule showing the difference between book value and fair value
S.no Particulars Bookvalue Fairvalue Difference
1 Currentassets p. 240000 p. 280000 p. 40000
2 Land 20000 100000 80000
3 buildings &
Equipment 400000 270000 ( 130000)
4 Patents 10000 30000 20000
5 Liabilites 250000 250000 0
Net Difference (10000)
net Difference is adjusted as fair value adjustment.
3) consolidation statement for pulaskee company
Current assets 40000
Land 80000
Patents 20000
Goodwill 170000
Retained earnings 430000
To building and equipment 130000
Investment in soorkee company 600000
Fair value adjustment 10000
The statement of financial position of Soorkee Company as of December 1, 2011 had book and...
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