Chopfer9

-
Business Comb inqlions - Sfof utory Mergers
q n d Sfof ufory Consolidqfions

lnlroduclion
A busrness combinotion occurs when q corporoiion ond one or more other businesses ore
broughl together os o single eniity to corry on the octivilies of the previously seporoted
enlerprises.

It is the result of lhe ocquiring of conlrol of one or more enterprise by onother enlerprise, or
lhe union of ownership inleresls of two or more enlilies.

u. Legal Poinl of.View

From the legol point of view, o bujiness combinolion ore clossified os follows:

l. Acguisilion of Assels - The ocQuinng corporolion must negotiote wilh monogemenf

lo obloin the osseis (ond ossume ihe liobilities) of the cqmpony being ocquired in
exchonge f or cosh. secun/iet orolherconsideration. Upon consummotion, the acquked
compony ceoses lo exist os o seporote economic, legol, ond occounling entity. The
surviving corporotiorf records in its books lhe qssets ond liobilities of lhe ocquired
compony. Nole lhol this resulls in oufomolic consolidotion for the current ond
subsequenl periods, since lhe ossels ond liobilities of both componies ore recorded in
lhe some set of books. Acquisilion of osseis qnd ossumption of liqbililies moy either be:

o. Stotutory Merger - when fwo or more corporotions merge into o single entity
. which sholl be one of the constituenl corporolion. ln other words, one
consliluent corporotion ocquires lhe other constituent corporolions ond
retoins their originol ideniity. while lhe ocquired corporotions ore
qulomqticqlly dissolved. lt moy be.expressed qs follows:

A CorP. + B CorP. = A CorP. or B CorP.

b. Stotutory Consolidotion - when lwo or more consolidote ond form o new

, corporolion from lhen on. lt moy be expressed qs follows:

A CorP. +.8 CorP. = Z CorP

405
406 Chapter 9

2. Sfock Acguisilion or Acquisition af Common Stock - on ocquiring corporotion moy

ocquire mojority ownership interest of outstonding common stock oi conkol of q
corporolion ond the. seporole legol entiiies of eoth enterprised or" pr"r.ru"i1 ot
they both coniinue iheir legol existence. ln this cose, lhe ocquiring corporotion is
known os the porent ond the ocquired corporotion os subsidiory.
*

For finonciol.reporting purposes, however, the two componies moy be viewed os o

single reporling entity, in occordqnce with pAS No. 27 (2004); this creoles lhe need
for consolidoted finonciol slofemenfs.
It moy be expressed os follows:

Finonciol Stotepent of p Corp. + Finonciol Stotement of S Corp.

= Consolidqled Finqnciol Stotement of p Corp. ond S Corp..
lll. The following summories ore bosed on the pFRS No. 3 (200g):
l. Definilion of Btrsiness Combinotion. ll is o tronsoction or event in which on ocquirer
obtoins conlrol of one or more businesses.

2. Scope. lt does nol opply lo ihe following lronsoctions:

' Accounting by o joint orrongement in its finonciol stolemenls upon its
formotion.

' 31, the lFRl Committee noled thot the did nol chongd the refeience
IASB
to'the formolion of o joinl venture' in the scope exclustlon in IFRS 3 os o
consequenliol omendment. However, the Commitiee understood thot
lhe IASB did not wont to. c_honge ihe scope of IFRS 3. Consequenly,
ihe Committee observed thot IFRS 3 shouid'hove been omended t,o
refer to 'the formolion of o joini orrongement.' becouse IFRS I I redefined
ond renomed the differenl types of joint orrongements. Under IFRS I I
q Joint venlure'is one type of joint onongemeniiwhereos under IAS 31,
it included every lype of joint orrongement. The Committee directed
lhe stoff lo consider wheiher ihis issue con be qddressed through the
onn-uol improvemenls process. The stoff will present the onolysis-ond o
droft onnuol improvement ot o future ,.eiing.
) During November 201I meeling, the Commitiele discussed o question
over the scope exclusion in IFRS 3 (revised 2008) reloted to joint veptures.
The quesrion deort with whethei porogroth'ziot oi rins: sh;ud ri
t refer lo 'ihe formotion of o joint ventuie' or'lhe'formotion of o joini
grrongemen| os rhe rerms ore used in rFRs r r ond 2) oppry to the
finonciol stolements of the joint venlure or joinl onongemenf itself, q
porty to lhe joint venture or joint onongement or both.ihe Commiilbe
recommended lhe Boord should include o proposed qmendmeni to
porogroph 2(o) of IFRS 3 in lhe next exposure droft of the onnuol
improvemenls.

The Boord,tentotivery decided.ro propose on.omendmenr ro

porogroph 2(o) of IFRS 3 to reqd thot 'this IFRS does nol oppty to the
occouniing by o joint onongement in its finonciol stotemenis Lpon ift
formotion,.

The ocquisition of on ossel or group of ossels thot does not constilute

o
busineis, ond
' A combinqtion belween entities or businesses under common conlro.
Business Combinations - Statutory Mergers and

J. Melhod of Accounling. All business combinqlions wilhin the scope the slondord
must be occounted for using lhe ocquliilio n melhod. The Booling of inlerest method
is strictly prohibited. The ocquisition method consisls of:

. identifying the ocquirer

r determinlng the qcquisition doie ond considerolion lronsferred (purchose
price)
o recogflizing ond meosuring
!l - the identifioble qssets ocquired, lhe liobilities ossumed
- []ony non-conlrolling inlerest in the ocquiree
o rcognizing goodwill, or in lhe cose of o borgoin purchose, o goin

ldenlifying lhe Acquirer. Control is lhe power lo govern the finqnciol ond operoling
policies of on entity so os to obtoin benefits from its octivities.

The ocquler is the combined entity thot obtoins control of the other combining
entifr'es or businesses. Olher indicotors of which porty wos the acquirer in any given
business combinotions qre os follows (these ore suggestive only, not conclusive):

L The foir volue of one entily is signilicontly greaterthon lhot of the other
combining enlerprises; in such cose, lhe lorger enlity would be deemed
the ocguirer.
2. The combinotion is efiected by on exchonge of voiing stock for cosh;
the entity poying the cosh would be deemed lo be the ocquirer.
3. Monogement .of one enterprise is oble lo dorninole selection of
monogement of the combined entily; lhe dominont entity would be
deemed lo be the ocquirer.

Acquisilion Dole. The ocquisilion dote is defined os the doie on which lhe ocquirer
obioins control of the ocquiree. This is the dote lhe ocquirer legolly tronsfers the
considerotion, ocquires lhe ossets ond ossumes the-liobililies of the ocquiree - the
closing dole.

ldenlilylng ond Meqsuring Considerolion Tronsterred. The considerqlion lrsnsfened:

) is cqlculoled qs the sum of the ocquisition-dote foir volues of:

r ihe ossels tronsfened by the ocquirer;
r the liqbilities incuned by the ocquiree lo former owners of the
ocquiree, qnd;
r the equity interest issued by the ocquirer.

ln specific exchonge, the considerotion ironsfened lo lhe ocquiree could include

just one form of considerqtion, suLh os cosh, bul could equolly well consisl of o
number of forms such os cosh, olher ossets, shores ond conlingent considerqtion.

Acquisilion-reloled cosls. Acquisition-reloted cosls ore costs ihe ocquirer incurs to

effect q business combinolion. Those cosls include finder's fee; odvisory, legol,
occounting, voluotion ond olher professionol or consulting fees; generol
odminislrotive cosfs, including the costs of mointoining on inlernol ocquisiiions
deportmeni; ond cosls of registering ond issuing debt ond equity securilies. Under
408 Chapter 9

PFRS 3 (2008), lhe ocquirer is required lo recognize ocguisition-relofed cosls qs

expenses in the periods in which lhe cosls qre incurred ond lhe services ore
received, wilh one excepfion, i.e. the cosls lo issue debl or equily securilies ore
recognized in occordonce with PAS 32 (for equity) ond PAS 39 (for debt).

It is suggested thot, since ihe IAS Boord hos inlroduced lhe requiremenl to expense
ocquisition costs within PFRS 3 (2OOB}, it only opplies to finonciol stolemenls in
which o business combinotion is occounled for under PFRS 3 (2008).
\

Cosls ol lssulng Debl ond Equlty Securllles (or lnslrumenls).

F Cosl of issuing equily inshumenfs. ln issuing equity instrumenls such os
shores os port of lhe considerotion poid, tronsoction cosls such os
slomp duties, professionol odviser's fees, underwriling costs ond
brokeroge fees moy be incuned. Por. 35 of PAS 32 stoles thot lhese
oulloys should be lreqled ss ieducfion in lhe shsre capilol (debifed to
, APIC/Shore Premium| of the entity os such cosls should reduce the
proceeds from lhe equity issue, nel of ony reloled income lox benefit.
.
D Similorly, ihe costs ot onoiging ond issuing financisl liobilifies ore on
iniegrol port ol lhe liobilily issue fronsocfion. These costs ore included
ih lhe initiol .meqsurement of the liobility os Bond lssue Costs.

Therefore:
. Direct cosis of combinolion - expense.
r lndirecl costs of combinotion - expense.
. Costs lo issue ond register stock - debiled lo APIC/Shore premium
occount.
. Cosls to issue debl securities (bonds) - bond issue costs.

Conlingenl Considerqlion. According to Por. 39 of PFRS 3 (20081, consislent wilh

olher meqsurements in lronsfened consideroiion, the ocquirer sholl recognize ihe
ocquisition-dote fqir volues of contingent considerotion os port of the considerolion
lronsfened.

The considerotion the ocquirer lronsfer in exchonge for lhe ocquiree includes ony
ossel or liobility resulling from o conlingenl considerolion orrongement.

Recognilion Principle of Assels Acquired ond Liqbllilies Assumed. por. l0 of pFRS 3

(2008) requires thot, os of the ocquisition dote, lhe ocquirer shall recognize,
seporolely from goodwill, the identifioble ossels ocquired, ihe liobilities ossumed
ond ony non-controlling interest in lhe ocquiree.

It should olso be noled thal in Por. 13, the ocquirer moy recognize some of lhe
ossets qnd liobilities thot lhe ocquiree hod not previously recognlzed
(unrecognized ossets ond liqbilities) in ils finonciol slotemenis. For exomple, the
ocquirer recognizes the ocquired identifioble intongi[le ossets (e.g. brond nomes,
potenls, or cuslomer relotionship| thot the ocquiree did not recognize os ossels in
its finonciol stotements becouse it developed lhem internolly ond chorged ihe
reloled costs lo expense.
Bwiness
-Combinations - Statutory Mergers and Statutory Consolidatiitns 409

Meqsuremenl Principle ol Assels Acquired ond liobilities Assumed. Por. l8 of PFRS

. 3 {20081 requires lhot identitioble ossets ocquired qnd liobililies ossumed ore
meosured ot their ocquisition-doie loir volues.

One of lhe problems thot moy orise in meosuring lhe ossels ond liobilities of the
ocquiree is thol lhe initiol occounling for lhe business combinolion moy be
incomplele by the end of the reporling period. For exornple, lhe ocquisition dole
moy be Augusl l8 ond lhe end of lhe reporting period moy be Augusl 31. ln this
. siluotion, in occordonce wilh por. 45, the ocquirer musl report provisionol omounts
in its finonciol stolements. The provisionql qmounts wilt be best eslimoles ond will
need lo be odjusted to foir volues when lhose omounts con be delermined ofler
the end of lhe reporting period. The meosurement period in which the odjustments
con be mode connof exceed one yeot ofter lhe ocquisilion dote.

Non-controlllng lnleresl ln lhe Acqulree. This will qffect colculotions only where lhe
ocquirer obloins conlrcl (ocquisition of shore or stock ocquisition - Chopler 9| in lhe
ocquiree ond nol on ocgulsilion of ossefs ond ossumplion of ltqbililies (stolutory merger
ond slolulory consolidotion - Chopter 8). Por. 19 of PFRS 3 (20081 sloles lhot for eoch
business combinolion, qny non-conkolling interest in the ocquiree is meosured either:

> ot foir volue (using the full goodwill opproqchl; or

F of lhe non-conlrolling inleresl's proporlionole shore of the ocquiree's
identifioble net ossels (using. lhe portiol goodwill opproochl.

Recognlzlng ond Meqsuring Goodwill or o Goin lrom Borgoin Purchqse.

Stotulory Merger ond Stqlulory Consolidolion (Acquisilion ol qn Assels ond

Assumplion of Liobilities) . For lhis type of business combinqfion, the comporison
should be between the following:

l. Considerolion konsferred, ond

ll. Agquirer's interest in the nel foir volue ol lhe ocquiree's identifioble
ossets ocquired qnd liobilities ossumed.

Goodwlll orises when I exceeds ll. On the olher hqnd, bqlgoln purchose
qrises when ll exceeds ,. When o borgoin purchose occurs, o goin on
ocquisilion is recognized in ihe profit or loss.

It should be noted lhoi borgoin purchose goin would orise only in exceplionol
circumsionces. Therefore, before determining thol goin hos orisen, the ocquirer
hos lo:

. Reossess whether it hos correclly identified oll of lhe ossels

ocquired qnd oll of the liqbilities ossumed. The ocquirer should
recognize ony odditionol ossels or liobilities thoi ore identified in
lhot review.
. Any bolonce should be recognized immediolely in profil or loss.

For Slock Acquisilion or When Conlrol Exists (Acquisilion ol shores). Refer lo Chopter
9 for lhe procedures lo compule goodwill or gqin on borgoin purchose.
4tn ' Chapter 9

l. Rivendell poid finder's fees of P40,000, legol fees of p13,000. oudit fees
reloted to ihe stock issuonce of P10,000, stock registrotion fees of p5,000,
ond stock.listing opplicotion fees of p4,000.
Bosed on the preceding informotion, under lh'e ocquisition method, whot
omount reloting to the business combinotion would be expensed?

o. P19,000 c. P63,000
b. 53,000 d. 72,Offi

2. Using ihe some informotion in No. I:

o. P72,O00 of stock issue costs'ore treoted os goodwill.
b. P19,000 of stock issue costs ore lreoted os o reduction in lhe
issue price.
c. P19,000 of stock issue costs ore expensed.
d. P72,O0O of stock issue costs ore expensed.

3. ABC Co. is ocquiring XYZ lnc. XYZ hos ihe following intongible osset:

o Potent on o product thot is deemed to hove no useful life p]0,000.

. Cusiomer list with on observoble foir volue of p50,000.
r A S-yeor operoting leose with fovoroble terms with o discounted
present volue of P8,000.
. ldentifioble R & Dof P100,000.

ABC will record how much for ocquired lntongible Assets from the purchose
of XYZ lnc?

o. P168,000 c. P150,000
b. 158,000 d. s8,000

4. orbil lnc. purchosed Plonet co. in 2009. At thot time on existing polent
wos not recorded os o seporotely identified intongible osset. Ai thL'end of
fiscol yeor 2010, the potent is volued of p I 5,000, ond goodwill hos o book
volue of P100,000. How should ossets be reported ot the beginning of
fiscolyeor20l I?

o. Goodwill, P100,000; Potent, p0

b. Goodwill, Pl15,000; Potent, p0
c. Goodwill, P100,000; Potent, pl5,OOO
d. Goodwill, P85.000; potent, pl5,000
Busiress Coirbinaiions - Statutory Mergers and Statutory Consolidations 4I I

5. Acme Co. poid Pl 10,000 for the net ossets of Comb Corp. At the time of
the ocquisition lhe following informqiion wos ovoiloble reloted to Comb's
bolonce sheet:

Book Volue Foir Volue

Current Assets P50,000 P 50,000
Building 80,000 r00,000
Equipment 40,000 50,000
Liobilities 30,Q00 30,000

Whol is the omount recorded by Acme for the Building?

o. P 20,000 c. P100,000
b. P 80,000 d. P110,000

Using lhe sqme informotion in No. 5, whot omount of goin (loss) on disposol
of o business should Comb Corp. recognize?

o. Goin of P30,000 c. Loss of P30,000

b. Goin of P60.000 d. Loss of P60.000

7. Burrough Corporotion concluded thot the foir volue of Helyor Compony

wos p8b,000 ond poid thot omount to ocquire ollof its net ossets. Helyor
reported ossets with o book volue of P60,000 ond foir vdlue of P98,000 ond
liobilities with o book volue ond foir volue of P23,000 on the dote of
combinotion. Burrough olso poid P3,000 to o seorch firrn for finder's fees
reloted to the ocquisition. Whot omount will be recorded os goodwill by
Burrough Corporotion?

o.P0 c. P8,000
b. P5.000 d. Pr3,000

8. On June l, 201 l, Cline Compony poid P800,000 cosh for the ossets ond
liobilities of Renn Corp. The corrying volues for Renn's ossets ond liobilities
on June l, 201 I follow:

Cosh.......... P150,000
Accounts receivoble .................... 180,000
Copitolized softwore costs.......... 320,000
Goodwill 100,000
Liobilities i."........r...-.... ( l3o,o0o)
Net ossets P520,000
FE:

On June l, 201 I , Renn's qccounts receivoble hod o foir volue of p 140,000.

Additionolly, Renn's in-process ond development costs wos estimoled to
hove o foirvolue of P200,000. All other items were stoted of their foir volues.
On Cline's June I bolonce sheet. How much is reported tor' gooa*ili? --'

o. P320,000 c. P 80,000
b. Pt20,000 d. 20,000

9. on April I , 201 I ,77 corp. poid cosh of p620,000 for oll of the net ossets of AA
coT.pg!.y.oppropriotely occounted for os o merger. The recorded ossets
ond liobitities of AA Corporotion on April S,2Ot t fillow:
Cosh........... P 60'000
rnventory ...:::::,:::::::::...::::::.:::::::..::,
property, ptont ond equipment ' ' " 180'000
6;ili
occumutoted depreciotion of p220,000) ................. 320,@
Goodwill (net of occumuloted omortizotion of pso,ooO) 100:000
Liobilities
Net ossets $lq@q
on April l,2oll, AA's inventoryhod o foirvolue of pr50,000, ond lhe
property, ptont ond equipmeni (net) hod o toir,volue oiFdgo,o0o
iii;
omount of goodwill recorded in the,books of Tlos o reiutt of the Ousinesi
combinotion should be:
o. PI50,000 c. Ps0,000
b. 120,000 d. 0
(AlcPA)
l0- The vV compony hod these occounts ot the time itwos ocquired by Bush
Co.:

P 36,000
457,W
r20,000
696,4ffi
Accounts poyoble 350,800
poid P1,400,000 for net ossets of vv compony. tt wos determined
lvrl -cg. morket
ihol foir volues of inventories ond plont, p'ropdrtv, ono equipment
were P133,000 ond P9OO,O0O, respeclively.
An ossumed
9o{inggnt liobility orising from post events with o foir volue
omounting to Pr0,000 0nd such omount is considered o rerioble
meosuremeni.
Business Combinations - Slatutory Mergers and Statutory Consolidations 4 I3

ln the books of Bush Co., ihis tronsoction resulted in:

o. Goodwill recorded ot P441,400

b. Goddwill recorded ol P224,8O0
c. Goodwillrecorded ot P234,800
d. Cunent ossets increosed by P234,800
(ACCA)

I l. KK lnc. wos merged into LL lnc. in o combinolion properly occounted for

os oquisition of interests. Their condensed bolonce sheets before the
combinoiion show:
LL KK

Cunent ossets P2,288,W ?1,627,6W

Plont ond equipment, net .........."...'..' 4,654,000 1,040,000
Potents 260.000

Totolossets y!242,@o: P2,927,6@

Liobilities P2,704,OW P 171,600

Copitol stock, por Pl00 ............:...."..... 2,600,000 r,300,000
Additionol poid-in coPitol 390,000 390,000
Retoined eornings ..............:..... r,248,000 r,066,000

Totol Liobililies ond EquitY P6,942,000 P2,927,6@

Per independent opproiser's report, KK's ossets hove foir morkei volues of
P1,653,600 for curreni ossets, P1,248,000 for plont ond equipmenl ond
P338,000 forpotents. KK's liobililies ore properly volued. LL purchoses KK's
net ossels for P3,068,000. How should the difference between the book
volue of KK's net ossets ond the considerotion poid by LL be considered?

o. Goodwill: P 0 lncreose in Assets: P234,000

b. Goodwill: P 0 lncreose in Assels: P3l2,OO0
c. Goodwill: P338,000 lncreose in Assets: P234,000
d. Goodwill: P338,000 lncreose in Assets: P 78,000
{Adopted)
12- On I December20ll, Cosio Ltd. ocquired oll the ossets ond liobilities of
Auroro Ltd. with Cosio Lid.'rssuing 100,000 shores to ocquire lhese net ossets.
The foir votue of Auroro Ltd.'s oisers ond tiobitities ot tirii o;i;-;;;;,"'""''
Cosh.......... P50,000
Furniiure ond fittings .................... 20,000
Accounts receivoble 5,000
P1ont.......... ...............:.... r25,000
Accounts poyoble r5,000
Current tox liobility 8,000
Provision for onhuol leove 2,ffio
The finonciol yeor for Cosio Ltd. is Jonuory
- December.
The foirvolue of eoch cosio Lid. shore ot ocquisition dote is pl.g0. At
ocquisition do te, the ocquirer .orr Joniv determiheo proiio-onol f oir vo lue
for the ploni. on I Morch 2012, cosio Ltd. receiveo ihrei tinoivolue from the
independent opproisol, the foir volue ot ocquisition dote being pl3l,0o0.
Assuming the plont hod o further five-yeor life from the ocquisition dole.

The omount of goodwillorising from the business combinotion of December

l,20ll:
o. P15,000 c. P5,000
b. 13,000 d.0
{Adopted)
13. Diwolwql, o privote limite-d compony, hos ocquired cool, o privote limited
compony, on Jonuory 1 ,2O1 1. The foir volue of the purchose considerotion
wos l0 miltion ordinory shores of pl of Diwotwot, cjno ftre?li;;"-tr*
net.ossets ocquired wos pz miilion. Ailhe time of the ocquisition, the ";fi;
of lhe ordinory shores of Diworwor ond the
uoir;
otr"tr-dt coor'*"i" onrv
".i ot oiwotwof
provisionolly determined. The volue of the shores
ond lhe net ossels of coot {p2.5 m.illion) on Jonuo ry I , zol r, lpir-rni1fioni
were tinoiri
determined on November 30, 201 l. However, the 'directors of Diwolwol
hove seen the volue tl''u compony decline sincelonuo
9l ry 1 ,2oI t , ono oi
of Februory 1,201?,wish to chonge the volue of the pricr,or. considerotion
to P9 million. Whot.volue should be ploced on the pri.rr"r. considerotion
ond ossets of Cool os of the doie of ocquisition ? '

o. Purchose considerotion pl0 million, net osset volue pz million.

b. Purchose considerotion pl I million, net osset volue pz.S
million.
c. Purchose considerotion p9 million, net osset volue pz.s
miriion.
d. Purchose considerotion pl I million, net osset volue pz
mittion.
(Adopted)
Business Contbinations - Statutory Mergers and Statulory Cbnsolidations . 4I 5

14, Richord Ltd. ond Liwoy Ltd. ore two fomily owned ice creom producing
componies in Pompongo. Richord Ltd. is owned by the Melod fomily, while
ihe Bosilio fomily owns Liwoy Ltd. The Melod fomily hos only one son. ond
he is engoged to be morried io the doughter of Bosilio fomily. Becouse ihe
son currently monoging Liwoy Lld., it is proposed thot he be ollowed to
monoge both componies ofter lhe wedding. As o result. it is ogreed by the
two fgmilies thot Richord ond Ltd. should toke over the net qsseis of Liwoy
Ltd.

The bolonce sheet of Liwoy Ltd. immediotely prior lo the tokeover is os

follows:

Corrying Fou
Amount Volue
P20,000
Accountsreceivoble ............................. P 20,000
|nventory........,........... 140,000 125,000
1ond.......... 620,000 840,000
Buildings (net)........... 530,0m 550,000
Form equipment (net)
lnigotidn equipment (net).................... 220,W 2?5,W
Vehicles (net) .......... 160,000 172,Offi
P2,050,000

Accounls poyoble ....;.......... P80,000 P 80,000

Loon - Melrobonk 480,000 480,000
Shore copitol 670,000
Retoined eornings 820,000
P2.050,000

The lokeover ogreement specified the following detoils:

. Richord Ltd. is to ocquire ollthe ossets of Liwoy Lid. ond excepJ
one of the vehicles (hoving o corrying omount of P45,000 ond o
'
foir volue of P48,000), ond ossume oll the liobilities except for the
loon from Metrobonk. Liwoy Ltd. is then to go into liquidotion.
. Cosh of P20,000, holf to be poid on dote of exchonge ond holf in
r , one eyor's time.The incrementolborrowing rsteis 10% peronnum
(present volue for Pl ot l0%tor I period is 0.909091).
. Supply of o potent reloling to the monufocture of ice creom. This
hos o foir volue of P60,000 but hos not been recognized in the
. records of Liwoy Ltd. becouse it resulted from on internolly
generoted reseorch project.
 ' Richord Lid. is to supply sufficient cosh to enoble the debt to
, Meirobonk to be poid off ond to cover the liquidotion cosls of
P5,500. it willolso give p150,000 to be distributed to Mr. ond Mrs.
Melod to ossists in poying the wedding costs.
' Richord Ltd- is olso to give o piece of its own prime lond to Liwoy
Ltd. to be dislributed io Mr. ond Mrs. Melod, this eventuolly being
ovoiloble_fo be given to ony offspring of the forthcomin!
Igryoge.The piece of lond p220,000.
in question hos o corrying omount o-i
P80,000 ond o foir votue of
' Richord Ltd. is to issue 90,000.shores, these hoving o foir volue of
Pl4 per shore, to be distributed vio Liwoy Ltd. to ihe soon to-be-
monied-doughter of Mr. ond Mrs. Metod, who is currenlly o
shoreholder in Liwoy Ltd.

The tokeover proceeded os p9l

lhe ogreement with Richord Ltd. incuning
incidentol ocquisition costs of P2s,000, whire there were pl g,000 shore issu6
cosls-

The omount of goodwill or (borgoin purchose goin):

o. P45,682 c. P 1lB,5B2
b. 70,682 d. P(I09,818)
(Adopted)

15. Jone Lld-,-o supplier of snooker equipmenl, qgfeed to ocquire the business
9l o rivol firm, Mercy Ltd. toking over oll ossdts ond liobiliiies os ot r june
201l.
The.price ogr.ee.g upon wos p40,000. poyoble p2o,0o0 cosh ond the bolonce
py tne rssue to the seiling compony of 15,000 fully poid shores in Jone Lld.
lhese shores hoving o fo-ir volub of 'p2.50 per shoie.
The triol bolonces of the two componies os of I June 201 I were os follows:
Jone Ltd. Mercy Ltd.
Dr. Cr. Dn Cr.
Shorecopitol Pr00,000 P 9op0o
n eioineo?o.di;s;' ::::: : 12,000 P 24,O@
Accounts poyoble ...... 2.000 20,000
Cosh.......... P 30,000
Plont (net) 50,000 30,000
lnvenlory 14,000 26,WO
Accounts receivoble . 8,000 20,000
Governmeni bonds... r2,000
Goodwill 10,000
I!]lpqg q14,000 rru,Ooq flupa
Business Combinations - Statutory Mergers and Statutory Consolidations 417

ot
All the identifioble net ossets of Mercy Ltd. were recorded by Mercy Ltd.
foir volue except for lhe invenlory which wos considered to be worth
P28,000. The piont hod on expected remoining life of five yeors.

The businesi combinotion wos completed ond Mercy Lld. wenl into
liquidotion. Costs of liquidotion omounled to P1,000. Jone Lid. incuned
incidentolcosts of P5@ in relotion to the ocquisition costs. Cosls of issuing
shores in Jone Ltd. were P400. t

The omouni of goodwill:

o.P 0 c. P2,9N
b. 2,500 d. 3,900
(Adopted)

16. Generol Compony ocquired the net ossets of Moior Compony during 201 I .
The purchose price wos P800,000. On the dote of the tronsoclion, Mojor
hod no long-term inveslments in morketoble equity securities ond P40O,0O0
in liobilities. The foir volue of Citizen ossets on the ocquisition dote wqs os
follows:

Cunent ossets P 800,000

Noncurrenl ossets 600.000

:P1,400,000
How should Generol Compony occount for lhe P200,000 difference
between the foir volue o-f the net ossets ocquired, P1,000,000, ond the
cost, P800,000?

o. Retoined eornings should be reduced by P200,000.

b. Current ossets should be recorded of P685,000 ond noncunent
ossels recorded of P515,000.
c. P200,000 goin on ocquisilion of business should be recognized
d. A deferred credit of P200,000 should be set up ond
subsequently omortized to future net income over o period
not to exceed 40 yeors.
4 18 Choot* g

17. The Geek Compohy ocquired 100% of The Okoy Compony for o
considerotion tronsferred of Pl I2 million. At the ocqusition dotethe corrying
omount of okoy's net ossets wos P 100 million ond lheir foir volue wos p I 20
million.

Howshould the difference belween the consiclerotion tronsfened ond the

neiossets ocquired be presenied in Geek's finonciolstotements, occording
to PFRS 3 Business combinotions?

o. Goin on borgoin purchose of P8 million recognized in olher

comprehensive income.
b. Goin on borgoin purchose of P8 million deductedc from other
intongibles ossets.
c. Goin on borgoin purchose of PB million recognized in profit or loss.
d. Goodwill of ?12 million os on intongible qssei.

18. Foy ocquires ossels ond liobilities of Moy Compony on Jonuory l; 201 i. To
obtoin these shorbs, Foy poys Pa00 (in thousonds) qnd issues 10,000 shores
of P20 por volue common stock on this dote. Foy's stock hod o foir volue
of P36 per shore on thot dote. Foy olso poys pl5 (in fhousonds) to o locol
invesiment firm for orronging the lronsoction. An odditionol pl0 (in
lhousonds) wos poid by Foy in stock issuonce costs.

The book volues for both Foy ond Moy os of Jonuory I , 20] I follow. The foir
volue of eoch of Foy ond lr4oyoccounts is olso included. ln oddition,Moy
holds o.fully omortized lrodemork thoi slirl reroins o p40 (in thousondsl
volae. rhe figures below sre in fhousqnds Any reloled guesfion olso is in
thousonds.
i

Mov Componv

Foy,lnc. Book Volue Foir Volue

Cosh .......................... P 900 P80 PBO
Receivobler ..............::::.:::::::::: 480 rB0 160
lnventory 6& 2& s00
1ond.......... 300 120 130
Buildings (net) .......... 1,200 m 280
Equipment (net) .......... 360 r00 75
Accounts poyoble 4B0 60 60
Long-term liobilities 1,140 340 300
Common stock..:................... 1,200 BO
Retoined egrnings r,080 4&
 Assuming the combinotion is occounted fgr qs_on ocquisition, immediotely
ofter the ocquisition, in the bolonce sheet of Foy:

Whot omount will be reported for goodwill?

o.'P55 c. ?70
b. 65 d. 135

19. Using the some informotion in No. 18, whqt omount will be reported for
receivobles? ,r

o. P660 c. P500
b. 6n d. 4&

20. Using the some informotion in No. lB, whot omount will be reported.for
inventory?

o. P960 c. P7ffi
b. 9n d. 6n
21. Using the some informotion in No. I8, whot omount will be reported for
buildings (net)?

o. Pl,42O c. Pl,l40
b. 1,260 d. 1,480

22. Using the some informotion in No. 18, whot omount will be reporled for
long-term liobilities?

o. Pl,48O c. Pl,l80
b. 1,440 d. 1,100

Using the some informotion in No. 18, whot omount will be rePorled for
common stock?
o. Pl,2OO c. P1,400
b. 1,280 d. 1,480

24. Using the some informotion in No. 18, whot omount will be rePorted for
retoined eornings?

o. Pl,065 c. Pl,525
b. 1,080 d. 1,560
25. Using.the some informotion in No. lB, whot omount will be reported for
odditionol poid-in copitol?
o. Pl65 c. Pl60
b. r50 d. 175

26. using the some informotion in No. lg, whot omount will be reported for
cosh ofter the purchose tronsocJion?

o. P980 c. P875
b. P900 d. P555

27 . Bolter lnc. ocquired Jersey compony on Jonuory I ,201 I . when the purchose
occuned Jersey Cornpony hod the following infcjrmolion reloted to fixed
ossels:

P 80,000
200,000
(r00,000)
100,000
Accumuloled Depreciotion (s0,000)

The building hos

o lO-ye.-or remoining useful life ond lhe equipmenl.hos o s-
yeor remoining useful life. The foir volues of the ossets on'lhot dote were:

1ond.......... Pl00,m
Buildipg r30,000
Equipment 75,000
whot is the 201I depreciotion expense Bolter will record reloted to
purchosing Jersey Compony?

o. P 8,000 c. P28.000
b. Pr5,000 d. P30.000

28. On July 1,201 I t\O% ot The Noto Compony

J.!e loei.CompolJ-ogqulrgd
for o considerotion tronsferred of Pl50 mittion. At the ocquisition Ooti: ifr6
corryingo mount of Noto's net ossets wos Pl00 million. ni tfre
dole o provisionot foirvorue of pl20 miilion wos ottributed "cWisition
ioi# n;i
ossets. An odditionol voluotion received on Moy 31, 2OlZ increoseO tfr-is
provisionot fo.ir votue to pl35 miilion ond on tuty go, 2012 this foir-ftiu;
wos finolized ot pl40 million. Whot omount should Mogi prel.nitor.
goodwill in its stotement of finonciol position on Decenib i>r sl, iol2.,
occording to pFRS 3 Business combinolions?
o. P20 million c. P20 million
b. P25 million d. P60 million
Business Combinations - Statutory Mergers and Statutory Consolidations . 42l

29. OnJonuory l, 20l l, the foir volues of Pink Conrod's net ossets were os
follows:

CurrentAsset.......... .... P 100,000

Equiprneni 150,000
1ond.......... 5o,ooo
Buildings .. 300,000
Liobilities ......:............. 80,000

On Jonuory l,20l I, Blue George Compony purchosed the net ossets of

the Pink Conrod Compony by issuing 100,000 shores of its Pl porvolue
stock when lhe foir volue of the stock wos ?6.20.|t wos further ogreed
lhot Blue George would poy on odditionolomount on Jonuory l, 2013, if
the overoge incbme during the 2-yeor period of 201 lnl2exceeded P80,000
per yeor. The expected volue of this considerotion wos colculoted os
P184,000; the meosuremeni period is one yeor.

Whot omount will be recorded os goodwill on Jonuory 1,2OIl?

o. lero. c. PI80,OOO
b. P100.000 d. P284,000

30. Using the some informotion in No. 29, ossuming thot on August l, 201 I the
coniingent considerotion hoppens to be P170,000, whot omount will then
be rec6rded os goodwill on the soid dote?

o. Zero. c. P166,OOO
b. P86,000 d. P270,000

31. Using the some informotion in Nos. 29 ond30, ossuming thot on Jonuory l,
2013, the dole of settlement of the contingent considerotion clouse
ogreement for P175,000, lhe entry should be:

-o. Estimoled liobiliiy for contingent consideroiion.......... 170;000

Loss on estimoied contingenf considerolion................ 5,000
Cosh ............ 175.000

b. Estimoted liobility for contingent considerqlion .......... l75,OOO

Cosh ............ 175,000

c. Estimoted liobility for contingenl considerolion .......... 184,000

Goin on eslimoted conlingenl considerotion .... 9,000
Cosh .....................i;........... 175.000

d. No entry required.
ry

32. The Boy George compony ocquired the net ossets of the Girl conrod
compony on Jonuory l, 201 l, ond mode the following entry to record the
purchase:

Current Assets ......... r00,000

iquipruni -.-........::::.:.:....:.:....::..:..........:...::.::..:. 150,000
Lond..,....... 50.000
Buildings 300,000
Goociwill 100,000
Liobilities 80,000
Common stock, Pl por r00,000
Poid-in copitol in excess of por............... 520,000

Assuming thot odditionol shores on Jonuory l,20l3would be issued on

thot dote to compensole for ony foll in lhe volue of Boy George common
stock below P 1 5 per shore. The setflement would be to cure the deficiency
by issuing odded shores bosed on their foir volue on Jonuory l, 2013. The
foir price of the shores on Jonuory l, 201 3 wos p 10.

whot is the odditionol numberof shores issued on Jonuory 1,2013 to

cpmpensote for ony foll in the volue of the stock?

o. 160,@0 c. 60,000
b. r0o.0o0 d. 10,000

33. Whot is the omount of poid-in qopitor in excess of por on Jonuory l, 2ol3
immediotely ofter the odditionol shores were issued?

o. P520,m0 c. P420,000
b. P450,000 d. No effect.
.Polko
34. issues common stock to ocquire oll the ossets of the Dots compony
on Jonuory l,2oll. There is o coniingent shore ogreement, which stotes
lhot if the income of the Dots Division exceeds o c-ertoin level during 201 I
ond 201 2, oddiiionol shores will be issued on Jonuory I , 20 I 3. The impoct
of issuing the odditionol shores is to

o. increose the price ossigned to fixed cssets.

b. hove no effect on osset volues, but to reossign the omounts
ossigned to equity occounts.
c, reduce retoined eornings.
d. record odditionol goodwill. l
Business Combinations - Statutory Mergers and Statutory Consolidations 42 3

35. Moior Corporotion ocquired Problem Compony through on exchonge of

common ihqres. All of Problem's ossets ond liobilities were immediotely
tronsferred to Moior. Moior's common stock wos troding ol P20 per shore
of the time of exihonge. Following selected informotion is olso ovoiloble.
Before Acquisiiion After Acquisition
Por volue of shqres outstonding .... P 200,000 P 250.000
Additionol poid-in copitol P 350,000 P 550.000

Bosed on lhe preceding informotion, whot number of shores wos issued

of the time of the exchonge?
o. P 5,000 c. P12,500
b. 10,000 d. 17,s00

36. Using the some informoiion in No. 35, whot is the por volue of Mojor's
common stock?
o. PlO c. ?4
b.5 d. I

37. Usino the some informolion in No. 35, whot is the foir volue of Problem's
nel6ssets, if goodwill of P56,000 is recorded?

o. P.l94,000 c. P300,000
b. 244.0W d. 306,000

38. Zyxel Corporotion ocquired oll lhe ossets ond liobilities of Globe Totloo
Corporotion by issuini shores of its common stock On Jonuory 1,201.1.
poriiot bolonie shedt doto for the componies prior to the business
combinotion ond immediotely following the combinotion is provided:
Zlorel Globe
Book Volue Book Volue Combinotion
Cosh.......... P 65,000 P 25,000 P 90,000
Accounts receivoble 72,W 20,000 94,000
lnventory 33,000 45,000 88,000
Buildings ond equipment (net) . 400,000 rs0,000 650,000
Goodwill ?

TotolAssets _es7q@ P240,000

Accounts poyoble P 50,000 P 25,000 P 75,000

Bonds'poyoble ............. 250,000 100,000 350,000
Common stock, P2 por 100,000 25,000 160,000
Addilionol poid-in copitol ......... 65,000 20,000 245,W
Retoined eornings 105,000 70,0m.
Totol Liobilities ond Equities ....... P570,000 P240,000 ??
 Whot number of shores did Zyxel issue for this ocquisition?

o. 80,000 c. 30,000
b. 50,000 d. 17.500

39. At whot price wos Zyxel stock troding when stock wos issued for this
ocquisilion?

o. P2.00 c. P6.00
b. P5.63 d. P8.00

whot wos the foir volue of the net ossets held by Globe Toltoo ot the dote
of combinotion?
o. Pl15,000 c. ?27O,WO
b. P227,W d. P497,W
41. whot omount of goodwill will be reported by the combined entity
immedicitely following the combinotion?

o. P 13,000 c. P173,000
b. Pl25,000 d. P4r3,000

42. Whot bolonce in reloined eornings will the combined entity report
immediotely following lhe combinotion?

o. P 3p,000 c. P105,000
b. P /0,000 d. Pr 25,000

Ruben, lnc. is to ocquire Jomes corp. by obsorbing oll the ossets ond
ossumingcllthe liobilities fo the lotterin exihonge foriirores oitnJtorrn"ri
siock. Below ore the bolonce sheets of the two componies, with the
coresponding opproised volue increment for Jomes Corp.

Ruben Jomes
Assets, per books :............... P4,000,000 P2,500,000
Assets, opproisol increose P 300.000
Liobilities Pl.500,000 P 800,000
Common stock (No por; Pl00 pod.... 2,000,000 1,000,000
Additionol poid-in copitol 700,000 3@,000
Retoined eornings (deficit) ( 200,000) 400,000
Totol equities ............... P2,500,000
&,009,00q

ir
,i:l

.:s
Business Combinations - Statutory Mergers and Statutory Consolidations 42 5

The porties ogree to use the opproised volues, ogoinst which the foir morket
volue of the shores will be motched. Ruben, lnc.'s common stock is cunently
selling of Pl00 per shore.

The number of shores to be issued by Ruben, lnc. is:

o. 10,000 c. 17,000
b. 13,000 d. 20,000
(Adopted)

44. Sicot Co. will issue shore of P l0-por common slock for the net ossels of Mox
Co. Sicot's common stock hos o cunent morkei volue of P40 per shore.
Mox bolonce sheel occounts follow:

Current ossets
'
PropertyondEquipment 880,000 Additionolpoid-in-copitol (320,000)
liobi|ities............................( 400,000) Retoined egrnings (400,000)

Moxcunent ossets ond property ond equipment, respectively, ore opproised

ot P400,000 ond P I ,600,000; its liobilities ore foirly volued. Accordingly, Sicot
Co. issued shores of its common stock with totol morket volue equol to
thol of Mox net ossets. To recognize goodwiil of P200,000, how mony shores
were issued?

o. 40,000 c. 50,000
b. 45,000 d. 55,000
(Adopted)

45. Philip Compony will issue shores of its PIO por volue siock for oll of the
oulstonding stock of the Siyloy Compony. Philip Compony stock hos o
morkel volue of P40 per shore. Siyloy Compony's bolonce sheet oppeors
below:

CunenlAssels PI60,OO0 Current Liobilities P 50,000

Property, plonl ond......... Long-term debt............. " l50,O0O
Equipment.................,. 440,000 ."#?:i:T.:
.. 40,000
Poic{-in copitol in
excess of por r 60,000
Retoined Eornings ......... 200.000

Toiol .......... P600,000 P600,000

426 Chapter 9

Philip Compony estimoted thot the curent volue of the current ossetswould
be P200,000 ond the property, plont, ond equipment, P800,@0; the tiobilities
were correcfly stoied. Accordingly, Philip compony issued sufficient shores
of its stock so fhot the morket volue.of the stock issued equolled lhe morket
volue of Siyloy Compony's net ossets

Compute the stock exchonge rotio for Philip shores to Siyloy shores:

o. l:2 c. 3:l
b. 2:1 d. l:3
(PhitcPA)

46. Componies A ond B decide to consolidole. Asset ond estimqted onnuol

eornings contribulions ore os follows:
I co.A Co. B Totol
Net osset contribution ............... P300,000 P400,000 P700,000
Estimoted onnuol eornings
contribulion 50,000 80,000 r30,000

Stockholders of the two componies ogree thot o single closs of stock be

issued, thot their contributions be meqsured by net oslets plus ollowonces
forgoodwill, ond lhot l0% be considered os o nonnolrote of return. Eornings
in excess of the normol rote of return sholl be copitolized of 20% in
colculoiing goodwill. lt wos olso ogreed thot the outhorized copitolstock
of lhe new corporotion sholl be 20,000 shores'with o por volue of pl00 o
shore.

(l ) The omount of goodwill credited to co. A, ond {2) the totot contribution
of Co. B (net ossets plus goodwill):

o. (l) P100,000; (2) Pa00,000 c. {l) P100,000;,(2) P600,000

b. (1) PIs0,000; (2) P500,000 d. {l) P200,000; (2} P600,000
(PhitcPA)

47. componies X, Y, ond Z, porties to o consolidotion, hove the following

doto:

X Co. Y Co. ZCo.

Net ossets P400,000 P600,000 PI,000,000
Averogeonnuoleornings....... 60,000 60,000 80,000
 Ihe porties collectively ogreed thot the new corporgtio.lr.AA Co., will issue
o single qloss of stoik b--osed on the eornings rotio. Whot is the stock
distribluton rotio to componies X, Y, ond Z, respectively?

o.. 20:30:50 c.. 30:40:30

b. 30:30:40 d. 4O:4O:20
(Adopted)

48. Bols lnc., o new corporotion formed ond orgonized becouse of ihe recent
consolidotion of ll lnc. ond JJ, lnc., shollissue l0% porticipoting preferred
stocks wiih o por volue of Pl00 for ll ond JJ net ossets contributions, ond
. common shores with o por volue of P50 for the difference between the
iotol shores to be issued ond the prefened shores to be issued. The totol
shores to be issued by Bots sholl be equivolent to overoge onnuol eornings
.copitolized of l0%. Relevont doto on ll ond JJ follows:

JJ
Totol ossets P72O,W P921'ffi
Totol liobilities............. 432,000 345,6m
Annuoleornings (overoge) 46,080 69,120

The totol preferred shores to be issued ond the omount of goodwill to be

recognized by Bots ore:

o.
'b. Prefenedshores:8,640 Goodwill: P288,000
Prefenedshores:5,760 Goodwill: P288,000
c. Prefened shores:2,880 Goodwill: P864,000
d. Prefened shores:7,280 Goodwill: P864,000
(AdoPted)
 Appendlxfor SMEI - Busrness Combinofron
Some of the key differences between Full
of business combinolions ore os follows:
llern
Delinition ond termlnology
l. Businesr coinblnollon
2. Conlingent
Conslderollon
3. Cosls lncuned in o
builness combinolion
Direcl cosls
lndirecl costs'
Cosls to issue ond regisier
slocks
Costs to issue debts
4. Recognizing ond meosur-
lng ossels ocquired ond li-
obililies orsumed on iniliol
recognilion
ldentifioble
lntongible osseis
5. Exceptlons lo recognilion or
meosuremenl princlples, or
bolh, on iniliol recolnilion
1
Contingenlliobilities
6. Accounling Method
Terrn Used
Meosuring goodwill/
borgoin purchose goin
Voluotion of goodwill
PFRSs (F-PFRS) ond pFRS for SMEs (SMEs)
- F-PFRS
, SMEs
... is o lronsoction or other 'bringing logether seporote
evenl in which an ocquirer lilies or buslnesses into one en-
obloins control of one oi more poriing enlity'
re-
businesses."
. lnitiolly recognized os . lnitiolly recognized in the
parl ol fhe considerotion cosf of the com5inotion onlv if
tronsferrted. if meels probobilitv ond,r6li-
. obly meosuroble' d,riterio.
Non-occurrence of o fu-
fure eyenl (e.9. not rneeling . lf future eyenf does nol
eornings torg-et) is nol con- cur, then ony odiustmenfsoc-fo
sidered fo be o rneosure- fhe cosf of t6e blrsienss corn-
ment period
therefore not' odiusfed- goodwill.
odluslmenf bination ore mode ogoinsf
ogoinst goodwill.
Expensed Copitolized
Expensed Expensed
)ebited io APIC/Shore Debited to APtC/Shore
Premiuin Premium
Debited lo'BlC Debiled to BIC
Recognized seporolely from Requires recognilion if their fqir
goodwill if it is either c6nhac- vcrlue con be meosured reli-
luol or seporoble obly
Recognize only where lhere is Requires recognition of possible
g present obr,gofion lhot qrises
obligoiions if lheir foir vcjlue con
trom pqst events ond its foir be meosured reliabty.
yolue con be meosured reri-
obly.
Acquisition Melhod Purchosed Method
Options: Proporlionote shore of idenlifi-
l. Full fqir Volue ob.le net ossels {portiol Good-
(Full Goodwiil) will)
2. Proporlionofe shqre of
identifiobte net ossets (por-
tiol Goodwill)
Cost less impoirment losses Cosl less impoirment losses ond
omortizolion (life should be pre-
sumed lo be l0 yeorsl
Business Combinations - Statutory Mergers and Statutory Consolidations 429

b il, b 21. d 31. o 41. o

b 12. o 22. b 32. c 42. c
b t3. b 23. c 33. b 43. d
o 14. o 24. o 34. b 44. b
c 15. b 25. b 35. c 45. b
c 16. (' 26. d 36. c 46. c
b 17. c 27. c 37. o 47. b
b lB. o 28. b 38. c 48., o
o 19. b 29. d 39. d
c 20. o 30. d 40. b

l. (b)

fees............
Finder's P40,000
fees............
Leool 13,000

Totolexpenses.............. M!99
Acquisition-relofed costs. Acquisifion-reloled costs ore costs fhe acquier incurs to
effect o business combinotion Those cosfs include finder's fed; odvisorY, legal'
occounfing, voluotion ond olher professionol or consulting fees; generol odministrotive
cosfs, including fhe costs of mointoining on internol ocquisifions department: and
costs of registering ond issuing debf ond equily securities. Under PFRS 3 (2008), the
ocquirer is required to recognize ocquisifion-relofed cosfs os expenses in lhe periods
in which lhe costs ore incurred and the services ore received, wilh one excepfion, i.e.
lhe cosls lo issue debt or eqvily securilies ore recognized in occordonce with PAS 32
(for equityl ond PAS 39 (for debt).

2. (b) - refer to No. I for further discussion.

Audit fees reloted to stock issusnce Pr0,000

Stock registrotion fees .....,..... 5,000
Stock listing fees .....,..... 4,000

:P t9.000
3. (b)- (P50,000 + p8,000 + pl00,0OO = pl58,OOO)
fhe ocquirer should recognize, seporofe/y from goodwill, the idenfifioble ossefs
acq'uired in o business combinotion IPFRS 3 (2OOBl.B3tl

A patent thot hove no useful /ife js nof considered on ossef.

An intangibile is seporoble it it copobte of being seporoled or divided from the entity

ond sold, tronsferred, licensed, rented or exchonged, either individuolly togefher:
with o relofed
.controcf ...fpFRS 3 (2008).8331
The amount by which the leose lerns ore fovoroble compored with theferms of
current market fronsoclions for the sorne or simitor ilems is on intongible ossefs fhol
meefs fhe contractuollegol criterion tor recognilion seporolety froi goodwill, even
tl?ygn the cicquker cQnnot se/l or ofherwise tronsfer fhe leose coitroct. IPFRS 3
(2008).832 (oll

Cusfomer ond subscnberlisfs ore frequentlylicensed ond fhus meel lhe seporabitity
criterion. IPFRS 3 (20081.8331.

It moy seern thot lhe lerms "reseorch" and.,'development,. which moy be ossocjofed
wilh such ossefs os potent ond soffwore development, ore not applicoble to ott
inlernolly intongibtes, such os brond nomes. However, if needs to be rernernbered
thot all intongible ossels rnusf meef fhe identifiabitity criterion, one port of which is
seporability.

4. (o)

PFRS 3 (2008 reqvire.s thol ot the ocquisition dote, ihe identitioble

ossefs ocquired
ond liobilities ossurned.should be designoted os necessory to opply otfrer pfnsi
subsequenf/y. Ihe ocguirer rnqkes fhose clossifr'cofions or designolions on lhe bosis
of cqntroctuatterms,... os they exist ot fhe ocqubifion dote iplRs 3 (2oo}).lil----
Since,the potent wos nof recotrded seporotety os identitiotbte intongibte ossel on
the date of ocguisition> ond lhen no omounl of potent should oe-suosequeniry
recognized.

5. (c)

PFRS 3 (2008) por. l8 requires on identitioble ossels ond liobitities

ossumed ore
meosured ot their ocquisition-date foir vo,ues.

6. (c)

Selling price .:....... P I10,000

Less: Book volue of Comb {PSO,OOO + pgO,00O
+ P40,000 - pso,ooo) ....:...............
140,000
Loss on sole of business by lhe ocquiree {Comb)
7. tb)
Consideroiion tronsfered (foir volue) P80,000
Less: Foir value of net identifioble ossels ocquiied:
Foir volue of ossets.... .. P 9q,000
Less: Present volue/ Foir Volue of liobilities.... 23'000 75,000
Goodwill P 5,000

o A nel identifioble ossel meons nei qssels excluding goodwill (unidentitioble

osset|.
. Rn o6quisition+eloted cosls ore considered oulright expenses'

8. (b)

Cbnsiderotion tronsfened (foir volue) P800,000

Less: Foir volue of nef identifiable ossets ocquired:
Cosh
Accounts receivoble
Softwore 320,000
ln-pro-esi R&D........... .. m0,000
t-io'Oitities ...r.!;..ri........r .,..........!.{...'-. LIA!99) 680,000

Goodwill P120,000

The oppticotion of recognition meosurernents in busjness cornbinolion rneons thot

ai otriiilrer must, in recdgnizing seporofely the ocquirels .,nfongible ossefs, recognize
iiintiotie osseti thot th6 ocduir6e hos nol reco'gnized. in ils records, such os in-
pioieii ,eseorch ond develo prignt fhol connof be recognize under PAS 38 os inlernolly
'geieitea osels. As noted in par 34, recognilion by on ocq.uire_r of
.on ocquiree's tn-
FroC.ii reseorch ond devetopment praiect only depends.wheJher fhe pro,l'ecf.meels
'tf,e definition of qn intongi'ble ossef. lf con be seen lhof intongible ossels in o
Oriiness combinotion will b-e able, and in foct ore required, to.reco.gnize infongt'ble
ossefs fhof ore nof seporofely recognizabte when ocquired by olher meons. The
cosfs on individuot ossifs ocqi.,ired ore rneosured but reference lo the foir volue of
fhose ossefs.
Therefore, ,n-Process Reseorch ond Deve,oprnenf is copitolized. os on ossef of the
combincjilion and reporled os infongib.le ossets with indetinile lives subiecl fo
impoirment reviews. Refer lo No. 3 for further discuss'ions.

9. (o)
Considerotion tronsfened (foir volue) P620,000
Less: Foir volue of net identifioble ossets:
Cosh..... ..'................... P 60,000
lnventory
' Property,plonlondequipment................... 380,000
Liobilities {120,000) 470,000

Goodwill PI50,000 (o)

10. (c)

Considerotion lronsferred (foir volue) Pt,400,000

Less: Foir volue of nef identifioble ossefs ocquired:
Cosh..;....... P 36,000
Accounts receivoble 457,M
lnventories r33,000
Property, plont ond equipment 900,000
Accounts poyo ble ......................................:....... (3s0,800)
Provision for liobility (r0,000) l,l6s,2oo
Goodwill
L2gldaq
PFRS 3 |2OOB) par.23 requires thot lhe ocquier should recognize o contingenf liobitity
ossumed in o business combinotion os of lhe dofe of ocquisition if:
. il is o presenl obligotion fhof orises from post evenfs,. ond
o ifs foir volue con be meosured retiobly.

Th'erefore, controiry.to P.|s 37,,the ocqvher recognizeso confingen f liobility ossurned

in o business combinotion ot the ocquisifion dole even if it not probobte thot on
outflow of resources embodying economic benefifs wilt be required to setffe tfre
obtigotion.

il. (b)
Considerolion tronsferrecf ............ P3,068,000
Less: Morket volue of net ossets ocquired, excluding GW:
Current Assets
Plont ond Equipment
Potents 33B.O0O
Liobilities;................... ( l Zl,600) 3,068,000
Goodwill
-o- (b)

Book Foir lncreose

Volue Volue fDecreose/
Cunent Assets ....................... P1,627,600 Pr,6s3,600 P 26,000
Plont ond Equipment .,....... 1,040,000 1,248,ffi0 208,000
Potents 260,000 338,000 78,000
lncreose in ossels P3r 2,000 {b}
Business Combinations * Statutory Mergers and Statutory Consolidations - 43 3

12. (o)

Considerotion tronsfened (100,000 shores x P1.90) P 190,000

Less: Foir volue of nef identifioble ossets ocquired:
Cosh..........
Furniture ond fitlings 20,000
'Accounts receivoble .. 5,000
P1ont.................. 125,000
Accounts poyoble
' Cunent tox liobility ....... .................. t 8,000)
Liobilities..........
Goodwill P r 5,000

ene of the problems thol moy orise in meosuring fhe ossels ond liobilities of fhe
ocquiree is fhof lhe initiol occounting for lhe business combination noy be
incomplele by the end of the reporting period. For exomple, lhe ocguisilion dote
moy be Augusl 18 ond lhe end of the reporting period moy be August 31. ln lhis
situofion, in occordance with par. 45, lhe ocquirer must report provisionol omounls
in ifs finonciol sfofemenfs. The provisionol omounls will be besf eslirnotes ond'will
need to be odjusfed lo foir volues wl;en those ornounls con be determined after lhe
end ot the reporting period. Ihe meosuremenl period in which the odlusfnrents con
be mode tonnol exceed one Yeor olter lhe ocguisiflon dofe.
The corrying dmount of the plont must be colculoted os if ifs foir valve ol the
ocquisifion dote hod been recognized from that dote, with an odjustment to goodwill.

tf the ptant had o S-yeor life from ocquisifion dofe, Cosio Ltd would hove chorged
depreciotion lor I month in 20],l.. Extro depreciotion of P100, being l15 x lll2 x P6
000 is required in 2012.

Ihe odjusfing entry at Morch 1,2012 is:

gdjuslment for provisionol occountingl
Plonf """""' 6'000
Goodwill 6,000

(Adjustment to depreciotion due lo provisionol occounting)

Reloined Eornings (l /l /12)....................... 100
Accumuloted Depreciotion.......... l0A

tf depreciotion hos been colculo ted monthty for 2012, f urlher odjusfrnents would be
required.

13. (b) - refer fo No. 12 for discusstbn on provisional occounting.

14. (o)

Considerotion tro nsferred:

Shores: (90,000 x Pl4 per shore) .... p1,260,000
Cosh: Poyoble Now.......... 2O,0OO
Defened (P20,000 x 0.909091) ...........,....... lB,lB2
Potent................................ 60.000
Cosh (to Metrobonk)..... . ... .. .. 4BO,0OO
Liquidotion costs.......... S,SO0
Wedding costs ....;............... 150,000
Lond.......... ..................... 220,000 P2,213,682
Less:FoirvolueofnetidentifiabIeossefsocquired:-
. Accounts receivoble
lnventory l25,OO0
lond.......... ...............r..... g4O,O00
8ui|dings ...............
Form equipment .........
lrrigotion equipment............... 225,06
Vehicles (P172,O0O-F48,000)...........;............... t24,OW
Accounts poyoble .........!..r...i......... ( SO,OO0) 2,r 68,000
Goodwill l_4s,682
,f shou,d be nofed lhot ocquisition-reloted cosl is nol fhe some with liquidolion-
relofed cosfs even th-o--ugh the consequence of ocquisifion is liquidofibn-oi lfre
qcC{,i,.e9. Any cosfs of liquidolton or of stunilor iterro poii or supptieci Oy iie:oiqutrer
should be port of the considerotion lronsfened for reoson ttidt it woi intenodo to
comp/efe lhe process of liquidotion. Fhe reoson for such iriclusion is ffroilfre
considerofion received.from the ocquirer moy be used fo poy for fiobilfr'es nof osiumeO
Pv .t!:.9 acquker ond f or liquidolion expenses which is'tontomount to unrecorded
liobililies from liquidotion point of view. These ifems shou,d nol be confused wifh
ocquisition-relofed cosls os noled earlier which ore considered outright expeniJs.
Further, any liquidotion cosls or similor item which wos nol of fhe som! situ6fion os
menlioned obove should be lreofed os expenses.

15. (b) - refer to No. l4 for further discussion on liquidotion costs.

Considerotion lronsfened:
Cosh.......... p 20,000
Shores: 16,000 shores x p2.S0 60,000 p g0,O0l
Less: Foir volue of nef identifiobte ossefs ocquired:
P1ont..........
lnventory..;....r..-......... 2g,OO0
Accounts receivoble .................j.... S,OOO
P1ont.......... 2O,OOO
Accounts poyoble .:........................ ( 20,000) 5B,0OO
Goodwill P 2,000
:
 when it liquidotes. cosfs of tiquidation paid bY .lhe ocguiree :foyld be for the occounl
of fhe ociluiree aia-iiti be'evenfuoily tronsferred lo slockholders' equityprocessoccount.-
inis poyment moOe snould considereil expenses Oy tlg ocquiree in ihe of
tiqui'aoiion not unnfe-p]yment supplied ond mode by the ocquirer' which is intended
for ony unrecorded exPenses.

16. (c)

A borgoin purchose is o business combinotion in which the nel foir value of lhe
jdeitiio|rc'ossets ocquired and liobilifies ossumed exceeds the oggregole of lhe
considerotio n tro nste rred.

ll should be noled thot borgoin purchose goin goin wo.uld orise on,y in exceplionol
tircrmrion."s. Iherefore, bef'ore cietermining-thot hos orisen, the ocquirer hos
lo;
l. Reossess whelher it hos conecttY identified c/ll of the ossels ocquireQ..ond.
oll of the fioOiiiiles ossumed. The ocquirer should recognize ony odditionol
osselt. or liobilifies thot are identified in thot review'
2. i;i ootonce should be recognized immediotety in profit or ,oss.
17. {c)
ihe considerotion tronsferred should be cornpored with fhe foir volue of fhe nef ossets
ocquired, per PFRs 3 par. 32.Ihe goin of P8 mitlion resulls from o bargain purchose ond
should be recognized in profit or los, per PFRS 3 por' 34'

lB. (o) - refer to No. I for further discussion on ocquisition-reloled cosls ond
bdsts to issue ond register stocks.

P 400
360
P 760

705
P55
F

le. (b)
Receivobles:
Acquirer - Foy (ot book volue) ........................ P@
Acquiree - Moy {foir volue, ddte of ocquisition)
f,E
?640
20. {o)
lnventory:
Acquirgr- Foy (ot book volue)
Acquiree - Moy (foir-volue, ddte of ocquisition) 3OO

P960
21. (d)
Auitdings (net):
Acquirer - Foy (ot book volue) ........................ PI,200
Acquir:ee- Mgy (foir volue, dote of ocquisition) m
.P1,480
22. (b)
Long-term liobilities:
Acquirer- Foy {ot book volue) ...............-........ Pl,l40
Acquiree - Moy (foir volue, ddte of ocquisition) 300
PL,ln
23. (c)
Common s,tock:
Acquirer - foy 1ot book volue/por) ................ P1,200
Add: lssued shores (new, 10,000 x p2O pod .... M
Acquiree = Moy (not ocquired) ..................,:.... 0
Pr,400
24. (o).-.refer io' No. .l for further discussion on ocquisition
.iEi"o costs.
Retoined eornings:
Acquirer - Foy (ot book volue) ........................ P],080
Less: Acquisition+eloled costs'(direct costs) . .15
Acquiree - Moy (not ocquired)' ......................... 0
P1,065
It should be nored thot, there wos..no borgoin.purchose goin (refer
moy.offectrelojnedeorningsonlheocq!rsifi6ndote. to No. lg) which

;
$
,a
{
,a
fi

$
#
..s
 25. (b) - refer to No. I for further discussion on stock issuonce costs.
Additionol poid-in coPltol:
Acquirer- Foy (ot book volue) '..................,.... PO
Add: APIC from newlY issued shores
110,000 shores x (P36 - P20 podl ..........'.-
150
Less: Stock issuonce cosis ...'...... l0
Acquiree - Moy (not ocquired) .....'...'..."......... 0

ruq
26. (d)
Cqsh:
Acquirer- Foy (ot book volue) ..'............,.'..,'.. P 900
Less: Cosii poid to ocquire net ossets of Moy 4m
Acquisition-reloted costs - direct 15
Stock issuonce cos"fs l0
Acquiree - MoY (foir volue) BO

P 555

27. (c)
Depreciotion expense:
Building, ot book volue {P200,000 .

P100,000)/ l0Yeors P10,000

Building, undervoluotion (Pl 30,000, foir volue
- P100,000, book volue) / l0 yeors ..".'... 3,000
Equipment, ot book volue (P100,000 -
P50,000) / 5 yeors r0,000
Equipment, undervoluotion {P75,000, foir volue
- P50,000, book volue) / 5 yeors .'..i......... s.ooo

Totol depreciotion expense

28. (b)
Ihe conside rotion lronsferred shoutd be compore d with lhe foir volue of ihe net
ossels ocquired, per PFRS3 por. 32. When provisionol foir values hove been identifi.ed
ot the first reporting date qfler the ocquisifion, odiuslments orising within lhe
rneosurernent period (o moximum of 12 months lromt he ocquisilion dote/ should be
retoted bock fo the ocquisition.doie. Subsequenf odjusfments ore recognized in
fi profit or loss, unless lhey con be clossified os erors under PASB Accounlingpolicies,.
ii
chonges irr occounling eslimoles ond erors. See PFRS 3 pors. 45 and 50. The iinal
d amount of goodwitl is Pt60 million considerotion tronsfened less Pl35 million fok volues
I
$,
on May 31,2012 = P25 million.
ti

ll
2e. (d)
bonsiderotion trqnsferred:
Shores: {100,000 shores xp6.20 P620,000
Contingent considerotion r84,000
Totol.......... P804,000
Less: Foir volue of nef idenfifiobte ossefs ocquired:
Current ossets Pr00,000
Equipment 150,000
Lond .......... ..........;.......... 50,Q00
Buildings 300,000
Liobilities
L!9,oAE 520,000
Goodwill
|294!Aq
According to Por. 39 of PFRS 3 (2008), consisfenf with ofhelr meosurernenfs in lronsfened
considerofion, lhe ocquirer sholl recognize lhe ocquisition-dote foir vo,ues oJ
contingent considerofion.os porl of lhe considerotion' transfeffed.
Ihe considerotion the.ocquirer lronsfer in exchonge for lhe ocquiree inctudes any
ossel or liobility resulting trom
o contingent considerofion arrongement.
' App??dix..A o.!..PFRS 3 (2008) provides fhe foltowing definition of contingent
considerotion: "Usuolly, on obligation of the ocquirer ,titronsfer .oddilionat ossel or
equity inferesfs to the former owners of on ociluiree os port of tne elxi'nqiSe- ror
control of the ocqukee if specified fulure evenls occur or cohdifions ore rnef. noivevei,
conltngenl consrderolion olso moy.-give the o.c_quher the right to the relurn oi prer6isry
tronsferred considerofion if specifr'ed condifions ore rnej.,,

The Pt84,000 r's one clossicol exomple of contingencies is where the future income
of
tl?121y.i{:^lilre,gor!ed os uncertqjn,' the ogre6rnenf contoins-s ctouse ilrof requrrJs
the acquirer to provide odditionol con5iderofion to lhe acgviree rf the income oiffre
acquker is nof equol fo or exceeds o specified omovni ouei iome specified period.

30. (d)
Goodwill, l11/2011 P 284,000
Less: Adjustment on contingent considerotion
(P184,000-P170,000) l4,0oo
'Goodwill. 8/tl2}t1 P 270,0W
Chonges.fhot are fhe result of the acqvirer abtoining odditionot informotion oboul
focls ond circurnslonces thof exisfed oi fhe ocquisiti6n aate, oia inot occur within
fhe.meosurement period (which moy be o moxiium ot oii
veoiioi-ine;:;rffi;;
date). .o.re r.ecognized os odlr.rslmenfs ogoins-r tne origiiat 'oc-counting
ocquisilio4 fond so moy impoct goodwitt) --see secfion r [J.tFrnsl poo\)
io;i iie
-
6ar. sa]
lncidentolly, .the entry to record rhe revision of goodwiil shourd be;
Estirnqfed tioP,itity,for confingenf consjde-rotion.....-......... -ti,OOO
Goodwill ....... t4,000
31. (o) - refer to No. 2g tor further discussion.
32. (c)
Seticiency: (P I 6 - P l0) x l00,OOO shores issued to ocquire '... P 600,000
Di"id;d bi: Foir volue'of shore ...........'........ P l0
Additionol number of shores to issued 60,000

tn relotion to No. 29 on Confingencies, onofher exomp/e of coniingencies is where the

of
ocoUler isiues fo fne ddduirle oia tne ocquiree'is concerneid thot the issue
-ioi time.
m'ok{n6-mbitet price of the ocquirer's shores dec/ine over
in"rjj"rii"ii" qcquiei
ii'eret"ie,1ne iay otrei o}ditionot cosh ol shores if the morket price folls
Oetow o ipecified'omount over o specific period of time.

33. (b) - (P520,000 - P6O,O00 = P460,000), refer to No. 32lor furiher discussion if
morket price folls below o specified omounl.
Chonoes resulfino trom events ofler (post-c ombinqtion ciong.es) the acqu)siliona
d;te fe.b. meetin'g on eornings to.rgei, entreoching o specified chore or reachtng
mTelton'e on'rese"orch onO deueto"pni proi6ct) itre not rneosurement.pe.riod
iiJi-riii't'.irr. Suin-Cnonges orelnereiore occouhteci for seporotely,from the business
Lcimninotion fne ocqJiier-olCounts for chonges in the'toir volu.e of contingenl
coriiiO'eroiioi tnot ord hol meosurement period odjuslrnenls os follows:
"" '"'i.'-";;ii;b;;i
' subseo'uent foniioeioi,on Ctosjlrieo 9: eqql{v. is nor.remeosured qnd ils
lettiemenf is occounted for within equity; .?nd
2. Lont,ntent consrderolion clossified os on ossel or liobilitY"'
The oroblem on hond fotls within No. l, so no odjustment would be required to goodwill
Oit'oi'ounted for within the equity secfion.
lncidentollY, the entry would be:
Poid-in coPitol in excess ol Par 60,000
t60,000
Common sfock, Pl par -.........---...

34. (b) - refer to Nos.32 ond 33 for further discussion.

3s. (c)
P550,m0
poiO-in copitol before issuonce {P2O0,000 1 P35qp00 ..'...-.....
Poid-in co'pitoloffer issuonce (P250,00O + P550,00) 800,000
copitolof shore issued of the lime of exchonge......
.Poid-in P25O,GJO
Divided by: Foir volue per shore of stock P20
Shores issued ...:...'............ : 12,500

36. {c)
i'-<lr volue of shores outstonding before issuonce 200,000
Por volue of shores outstonding ofter issuonce ...............'..,..' 250,000
Por volue of odditionol shores issued P 50,000
Divided by: No. of shores issued (refer to No.35| r2,500
Por volue of common stock P4
37. (o)
Considerotion tronsfened: Shores - I 2,500'shores'......'.'......... P250,000
Less: Goodwill ............. 56,000
Foir volue of idenfifioble net ossefs ocquired PI94,000
38. (c)
Comrnon stock - combined P160,000
Common' Acquiter Zyxel
--r00,000
Common,stock'issged P 60,000
Divided by: Por volue of common slock P2
Number of Zyxel shqres to ocquire Globe Tottoo 30.000
39. (d)
Poid-in copitol books of Zyxel (p100,000 + p65,000) P155,000
Poid-in copitolin lhe combinejd bolonce sheet
(P160,000 + P245,000) 40s,000
Poid-in coprlo[from the shores issued to ocquire
Globe Tottoo P240,ffiO
Divided by: No. of shores issued {No.3Z) .......................:......... 30.000
Foir value per shore when stock wqs issued

Or.
Por volue of common stock of Zyxel
Add: Shore premium/APlC per shore from lhe odditionol f2
issuonce of shores (P245,000 - p65,000)/30,OOO ...... 6
Foir volue per shore when stock wos issued

40. (b)
Net identifioble qse_ts of Zyxel before ocquisition:
{p6s,000 ! p_72,0oo + p33,000 + p400,d00 _ pso,ooo
_ P250,000) P27A,W
Net identifioble ossets in the combined bolonce sheei:
(P90.000 + p94,000 + p88,000 + p550,000 - p7S,O00
- P350,000) 497,0W
Foir volue of lhe nef identifioble ossels held by CtoOe
Totloo of the dote of ocquisilion P227,W
41. (o)
Considerotion tronsferred {30,000 shores x pB) P240,000
Less: Foir volue of nef ideniifiobte ossefs ocqijired (No.39) 227,W
Goodwill P 13,000
42, ic)
Reioined eornings:
Acquirer - Zyl.J (ot book volue)
Acquiree - Globe Totioo (not cicquired) ..................:..... O

P105,000
/t shou/d be noled that, there wos no bargoin purchose goin (refer to No. 4ll ond
ocquisition-reloled cos/s'which moy affect retained eornings on lhe ocquisitian
dote.)
43.
P2,800,000
800,000
P2,000,000
P 100

20,000

44.

P 400,qoo
1,600,000
(___19q@)
P1,600,000
200,000
Pr,800,000
P40
4s,000 (b)

4s. (b)
TototAssets, ql Cunent Volue:
Cunent Assets P 200,000
ProPertY, Plont ond euiPment ,t*ro*
P1,000,000
Less: Totol Liobilities
Current liobilities P 50.000
Long-term debt .......... 150,000 200.000

Net ossets of current volue (morket) P 800,000

Divided by: Morket volue of Philip's stock.....-.... P40
Shores to be issued bY PhiliP 20,000

r0,000
,Shore oulstonding of Siyloy (P40,000 + P4) ..'.'.....'
Stock Exchonge Rotio: Philip to Siyloy
{20,000+ 10,0@} ...........:............... 2:l (b)
'l
46. (c)
Compony A Compo{ryg
Net Asset Conlributions ............... Ps00,000 P400,000
Add: Goodwill
Averoge/Annuol Eornings .... P 5o,OO0 -P 8o,OOO
. Less: Normol Eornings
(l O% on Net Asset) .........................;... 30,ooo 40,000
P 20,000 P 40,000
M" M"
ll99,o9Q (c) P200,0-00

P500,000 (c)
:P400.000

X: P 60,000 6120 = w4
Y:' 60,000 6120 = W"
7: 80,000 8l2O = Ary"

|29q,000 1AW"

48. (o) )

JJ Totol !.

!
Averoge onnuol eornings .:............ P46,080 P69,120 P I15,200
Divided by: Copitolized ot 1W"
Totolstock to be issued P 1,152,000
Less:Net Assets {for P/S) 864,000
Goodwill (for Common Stock)..... (o)
_t-288,0q
Prefened stock (some with Nel Assets):
P864,000 / Pl 00 por ................ 8,640shoreS (o)