Computation of result of acquisition

Acquisition cost
Consideration transferred
Cash
Shares
Equipment
Patent
Payments to Acquiree's employees
Liquidation cost
Bond debt instrument - present value
Principal 500,000 0.55839478 279,197
Interest 25,000 7.36008705 184,002
Contingent liabilities - Under future events
For average income
For cash flow (present value)
For stock contingent consideration
Total Acquisition cost
Less: Acquiree's net assets @ Fair market value
Assets
Cash and cash equivalents 1,762,500
Trade and other receivables 1,138,375
Inventories 2,625,375
Prepayments -
Land 3,285,000
Building 2,900,000
Equipment 368,750
Machineries 1,120,000
Liabilities:
Accounts payable 1,325,000
Accrued expense 317,985
Contigent liability 200,000
Notes payable 1,000,000
Bonds payable - net 1,685,000
Goodwill

DATE OF ACQUISITION
1.) Acquisition cost

2.) Result of acquisition - Goodwill

3.) Harry's Total Assets

Acquirer's total assets - book value

Acquiree's total assets - fair market value
 Goodwill
Total
Less: Payments that decrease Acquirer's total assets
Cash
Equipment
Balance

4.) Harry's Total liabilities

Acquirer's total liabilities - book value

Acquiree's total liabilities - fair market value
Contingent liabilities - future
Bond payable
Face value
Less: Discount on bonds payable
Balance

Harry's Stockholders' Equity

5.) Common stock

Old
New
6.) Paid in capital in excess of par
Old 4,900,000
New - net increase
Issued 2,000,000
Less: Other acquisition cost 30,000 1,970,000
Paid in capital for contingent consideration
7.) Retained earnings
Before acquisition
Add: Gain on sale of patent
Total
Less: Decrease in Retained earnings
Other acquisition cost 90,000.00
Loss on sale of equipment 20,000.00
Total

Total assets
Less: Total liabilities
Total Stockholders' equity

SUBSEQUENT EVENT
8.) Changes in result of acquisition

Goodwill
Less: Changes in result of acquisition
a.) Increase in the value of Building
Provisional amount 2,900,000
Final value - date of acquisition 3,200,000
b.) Irrelavant
c.) Improve value on contingent liability - average income
Provisional amount 36,000
Improve amount 86,000
d.) Irrelavant - profit and loss
e.) Irrelavant
Adjusted result of acquisition - Income from acquisition

Entry:
a.) Building 300,000
Goodwill
Gain from acquisition

c.) Gain from acquisition 50,000

Contingent liability

9.) Change in acquirer's assets = P222,015

10.) Changes in acquirer's - profit and loss statement

New (120,000 * 80%)

Amount before increase in probability to 80%
Loss on contingent conderation
Gain from acquisition
Increase
 1,000,000
5,000,000
280,000
500,000
1,070,800
100,000

463,200 8,414,000

36,000
100,000
200,000 336,000
8,750,000

13,200,000

4,527,985 8,672,015
77,985

8,750,000

77,985

17,661,280
13,200,000
 77,985
30,939,265

2,300,800
300,000 2,600,800
28,338,465

5,006,280
4,527,985
136,000

500,000
46,800 453,200
10,123,465

3,600,000
3,000,000 6,600,000

6,870,000.00
200,000 7,070,000

4,155,000.00
500,000.00
4,655,000.00

110,000.00 4,545,000
18,215,000

28,338,465
10,123,465
18,215,000
 77,985

(300,000)

50,000

(250,000)
(172,015) Decrease

77,985
222,015

50,000

96,000
86,000
10,000
(172,015)
(162,015)
 Miami Heat
Current Assets
Cash and cash equivalents 5,875,000 1,762,500
Trade and other receivables 2,345,780 1,372,890
Inventories 1,450,750 1,825,375
Prepayments 235,000 117,500
Total Current assets 9,906,530 5,078,265

Non-Current Assets
Land 2,500,000 1,785,000
Building 4,000,000 3,000,000
Accumulated Depreciation - Building (1,000,000) (600,000)
Equipment 1,754,750 750,000
Accumulated Depreciation - Building (500,000) (281,250)
Machineries 1,250,000 1,250,000
Accumulated Depreciaion - Machineries (250,000) (250,000)
Goodwill 100,000
Total Non-Current Assets 7,754,750 5,753,750

Total Assets 17,661,280 10,832,015

Liabilities
Accounts payable 851,530 1,325,000
Accrued expense 150,000 317,985
Salaries and employees benefits payable 750,000 622,015
Notes payable 1,000,000 1,000,000
Bonds payable 3,000,000 2,000,000
Less: Discount on bonds payable (745,250) (215,000)
Total Liabilities 5,006,280 5,050,000

Stockholders' Equity
Common stock, P30 3,600,000
Common stock, P20 2,000,000
Paid in capital in excess of par 4,900,000 2,500,000
Retained earnings 4,155,000 1,282,015
Total Stockholders' equity 12,655,000 5,782,015

Total Liabilities and Stockholders' equity 17,661,280 10,832,015

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