1. *
-Date of Acquisition

2. controlling
Interest
Net asset Stock Acquisition
acquisition
Controlled Statutory Consolidation
Company A comp.+ B= C company
Consolidation of the
Statutory Merger
two Companies are
AUTOMATIC becauseAall
A comp. + B = company
The Company whose
subsequent transactions
Non-Controlling assets%were acquired is
of Voting Stock
Retains its legal
are recorded in a single
dissolved
identity books of the
set of and continues
Interest
(formerly called
as Minority
to prepare its own
Acquirer.
Interest) financial statements.

3. *Consolidated Statement
Consolidated statements- presents the financial statements
of the parent and its subsidiary as those of a single
economic entity.
Consolidation working papers- are prepared to facilitate the
consolidation of the separate statements of the parent and its
subsidiary(s) into a single set of consolidated statements.
Statements are to be consolidated when a parent company owns
over 50% of the voting common stock of another company
thereby having a controlling interest.

4. To eliminate the Investment account on the parent company’s
statement of financial position against the stockholder’s equity
accounts in the statement of financial position of the subsidiary
company.
Elimination entries appear only on the consolidation working papers,
they are not recorded on the books of either the parent or subsidiary
company.

5. Differ from asset
Produce the same acquisition because
consolidated statement of there will be a non-
financial position after controlling interest
acquisition with an asset in the consolidated
acquisition statement of
financial position.

6. Journal Entry on P Company to record Acquisition of
S company’s net assets.
Accounts receivable 32,000
Inventory 20,000
Equipment 158,000
Accounts payable 110,000
Cash 100,000

7. P Company
Statement of Financial Position Subsequent to Asset Acquisition
December 1,2011
Assets
Current Assets
Cash 130,000
Accounts receivable 72,000
Inventory 70,000
Total Current assets 272,000
Noncurrent Assets
Equipment 338,000
TOTAL 610,000
Liabilities and Equity
Current Liabilities
Accounts payable 390,000
Stockholders Equity
Common Stock 100,000
Additional Paid In Capital 80,000
Retained Earnings 40,000 220,000
Total liabilities and equity 610,000

8. Entry of P company on the date of Acquisition:
Investment in S company 100,000
Cash 100,000

9. * Acquisition of Wholly Owned Subsidiary
-100% Interest
P company acquires all of S company’s outstanding common stock for
P100,000 cash.
Consideration given (price paid) 100,000
Less: BV of Interest acquired (100%):
Common stock, S company P50,000
APIC-S company 30,000
Retained Earnings- S comp. 20,000 100,000
Excess P -0-
Note: In Financial Position of P company, only the statement of financial
position has changed to reflect the P100,000 reduction in cash and the
recording of the Investment in S company Account for the same amount.

10. P Company and S Company
Statement of Financial Position
December 1, 2011
P Company S Company
Assets
Cash P130,000 P -0-
Accounts receivable 40,000 32,000
Inventory 50,000 20,000
Equipment-net 180,000 158,000
Investment In S company stock 100,000
Total Assets P500,000 210,000
Liabilities and Stockholder’s Equity
Accounts Payable 280,000 110,000
Common Stock 100,000 50,000
Additional Paid in Capital 80,000 30,000
Retained Earnings 40,000 20,000
Total Liabilities and SHE P500,000 210,000

11. E(1) Common Stock- S Company 50,000
Additional paid-in capital- S comp. 30,000
Retained Earnings- S company 20,000
Investment in S Company 100,000

12. Consolidation P S Company Eliminations
Working Paper Company Consolidated
Debit Credit
Assets
Cash P130,000 P-0- 130,000
Accounts receivable 40,000 32,000 72,000
Inventory 50,000 20,000 70,000
Equipment-net 180,000 158,000 338,000
Investment In S
company stock 100,000 (1)100,000 --
Total Assets 500,000 210,000 610,000
Liabilities and Equity
Accounts payable 280,000 110,000 390,000
Common stock:
P company 100,000 100,000
S company 50,000 (1) 50,000
APIC:
P company 80,000 80,000
S company 30,000 (1) 30,000
Retained Earnings:
P company 40,000 40,000
S company 20,000 (1) 20,000
Total Liabilities and P500,000 P210,000 P100,000 P100,000 P610,000
Equity

13. P Company and Subsidiary
Consolidated Statement of Financial Position
December 1,2011
Assets
Current Assets
Cash 130,000
Accounts receivable 72,000
Inventory 70,000
Total Current assets 272,000
Noncurrent Assets
Equipment 338,000
TOTAL 610,000
Liabilities and Equity
Current Liabilities
Accounts payable 390,000
Stockholders Equity
Common Stock 100,000
Additional Paid In Capital 80,000
Retained Earnings 40,000 220,000
Total liabilities and equity 610,000

14. When the book values of the net assets of the subsidiary are
equal to their fair values, and the consideration given (price paid) is more
than the book value of interest acquired from the subsidiary, the excess is
treated as GOODWILL
Illustration: Assume that P Company acquires 100% of S company’s
outstanding common stock for P110,000 in cash on December 1,2011.
Entry on the date of acquisition in P company:
Investment in S Company 110,000
Cash 110,000

15. Computation of excess of the consideration over the BV of Interest Acquired:
Consideration given (price paid) 110,000
Less: BV of Interest acquired (100%):
Common stock, S company P50,000
APIC-S company 30,000
Retained Earnings- S comp. 20,000 100,000
Goodwill P10,000
Two factors that results an excess in Consideration given over BV of
Interest:
1. A difference between the book value of the subsidiary’s asset and/or
liabilities and their fair values.
2. The existence of goodwill in the subsidiary company.

16. E(1) Common Stock- S Company 50,000
Additional paid-in capital- S comp. 30,000
Retained Earnings- S company 20,000
Goodwill 10,000
Investment in S Company 110,000

17. Consolidation P S Company Eliminations
Working Paper Company Consolidated
Debit Credit
Assets
Cash P120,000 P-0- 120,000
Accounts receivable 40,000 32,000 72,000
Inventory 50,000 20,000 70,000
Equipment-net 180,000 158,000 338,000
Goodwill (1) 10,000 10,000
Investment In S 110,000 (1)110,000 --
company stock
Total Assets 500,000 210,000 610,000
Liabilities and Equity
Accounts payable 280,000 110,000 390,000
Common stock:
P company 100,000 100,000
S company 50,000 (1) 50,000
APIC:
P company 80,000 80,000
S company 30,000 (1) 30,000
Retained Earnings:
P company 40,000 40,000
S company 20,000 (1) 20,000
Total Liabilities and P500,000 P210,000 P110,000 P110,000 P610,000
Equity

18. P Company and Subsidiary
Consolidated Statement of Financial Position
December 1,2011
Assets
Current Assets
Cash 120,000
Accounts receivable 72,000
Inventory 70,000
Total Current assets 262,000
Noncurrent Assets
Equipment 338,000
Goodwill 10,000
TOTAL 610,000
Liabilities and Equity
Current Liabilities
Accounts payable 390,000
Stockholders Equity
Common Stock 100,000
Additional Paid In Capital 80,000
Retained Earnings 40,000 220,000
Total liabilities and equity 610,000

19. A Bargain purchase exist when the price paid is Less than the fair value
of the subsidiary’s net identifiable assets. The excess is treated as gain
on Acquisition.
Illustration: Assume that P Company paid only P80,000 for the 100%
interest in the stockholders’ equity of S company.
Entry of P company to record the acquisition:
Investment in S Company 80,000
Cash 80,000

20. Computation:
Consideration given (price paid) 80,000
Less: BV of Interest acquired (100%):
Common stock, S company P50,000
APIC-S company 30,000
Retained Earnings- S comp. 20,000 100,000
Gain on acquisition P(20,000)
E(1) Common Stock- S Company 50,000
Additional paid-in capital- S comp. 30,000
Retained Earnings- S company 20,000
Investment in S Company 80,000
Retained Earnings-P comp. (gain) 20,000

21. Consolidation P S Company Eliminations
Working Paper Company Consolidated
Debit Credit
Assets
Cash P150,000 P-0- 150,000
Accounts receivable 40,000 32,000 72,000
Inventory 50,000 20,000 70,000
Equipment-net 180,000 158,000 338,000
Investment In S
company stock 80,000 (1)80,000 --
Total Assets 500,000 210,000 630,000
Liabilities and Equity
Accounts payable 280,000 110,000 390,000
Common stock:
P company 100,000 100,000
S company 50,000 (1) 50,000
APIC:
P company 80,000 80,000
S company 30,000 (1) 30,000
Retained Earnings:
P company 40,000 (1) 20,000 60,000
S company 20,000 (1) 20,000
Total Liabilities and P500,000 P210,000 P100,000 P100,000 P630,000
Equity

22. * Acquisition of Partially Owned Subsidiary
(less than 100% interest)
-It is a term applied to the rights of stockholders other
than the parent company(controlling interest) to the net income
or loss and net assets of the subsidiary.
The non-controlling interest in the net income of the subsidiary
is presented in the consolidated statement of comprehensive income and
the non-controlling interest in the subsidiary’s net asset is shown in the
consolidated statement of financial position in total and is not broken into
common stock, additional paid-in capital, and retained earnings. It must
be shown as a component of stockholders’ equity.

23. IFRS 3 (2008) provides two options of measuring non-controlling interest in
acquiree:
 at fair value, or
 At the non-controlling interest’s proportionate share of the acquiree’s
identifiable net assets.