Question

Papilon Corporation acquired 90,000 shares of the 100,000 outstanding no-par ordinary share capital of Silicon Company for a price of P1,200,000 on January 1, 2011 at the time when Silicon Company had book and fair values as shown below. Papilon Corporation also paid P96,000 direct acquisition costs in the form of legal fees to outside consultants.  

Ordinary Share Capital	P480,000
Accumulated Profits	600,000
Total net assets at book value	P1,080,000
Add: Differences between current fair value and book value
Inventories (FIFO)	36,000
Property and Equipment	72,000
Total current fair value of identifiable net assets	P1,188,000

Required:

1. Prepare journal entries for Papilon Corporation on January 1, 2011 to record the acquisition of share from Silicon Company.
2. Prepare the required elimination entries in general journal form that are needed for a consolidated statements worksheet for a consolidated statement of financial position for Papilon Corporation and subsidiary on January 1, 2011

Answer 1

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