Stock Acquisition (Reviewer2)

STOCK ACQUISITION Acquiree - Binili  Subsidiary (Non-Controlling Interest) Acquirer - Bumili  Parent (Controlling Interest)  51% and Above - Dapat yung pinurchase 1. DETERMINE GOODWILL Cost of Investment PP of Cash PP of Stocks @FV PP of NCA Contingent Consideration FMV of NCI FMV of Previously Held Securities COI (Cost of Investment) IF:

vs.

FMV of NIA Assets excluding GW @FMV Less: Liabilities @FMV FMV of NIA

COI > FMV = Goodwill COI < FMV = Income from Acquisition

2 Methods of getting FMV of NCI 1. Proportionate Share Basis  CNCINA (Partial Goodwill Method) 2. Fair Value Method  Silent / Pag sinabi na “measured at FV” a. Given b. Assume c. Check i. Assumed Value = Purchase Price x NCI% CI% ii. CNCINA = FMV of NIA x NCI%

Whichever is higher.

2. WORKING PAPER ENTRIES (1) Eliminate SHE (2) Update Assets of Subsidiary to FMV (3) Recognize Goodwill Proportionate Share Basis

CNCINA

FMV of NIA x NCI%

FMV of NCI 1. Given 3. Check CNCINA w/c ever is higher. (Given vs. Check; Assumed vs. Check)

Fair Market Value Method 2. Assumed

Kanino yung Goodwill? Parent

Assumed

Simple (Ratio)

Full Subsidiary

Goodwill

Goodwill

Partial

Given

Parent CNCINA



Determination and Allocation Schedule GOODWILL CI COI PP in Cash FMV - Less: FMV of NIA (CI%) xx

ERIKA MAE ARMES RELLORES

NCI FMV of NCI FMV of NIA (NCI%) xx

Determination and allocation schedule

Parent