our topic for today is hunting for business combination most students find this topic very challenging and difficult pero I'm here and I'll try my best to simplify this for you ok there's two types of business combination first is merger or acquisition second is on so division for merger a position it's a plus B is equal to a or b meaning but not merged a and B is an anonymity can laugh a or b and one of them will stop it's of the regions okay a perfect example for this is remember in any advocacy is a turn when grab awkward uber Philippines divine the undergo operate b2c uber is an example of merger or acquisition one thing to remember is that in a merger acquisition there's only one set of financial statements all right on the other hand for consolidation it's a plus B is equal to C Missa PN McCarran a new company which is company C and in a consolidation you have three sets of financial statements C budino data logging parent and sipping among subsidiary array a new three sets of a personnel will be FS near a and because this separate financial statements and at the end of the year they have to prepare another set of FS for Company C we call it the point so vivid so they did financial statements okay basically you consolidated the add mode on you separate FS of a and B alright jung-hwan champion is similar to the combined financial statements in hunting for home office and branch all right now in consolidation do you have three major stages first is at the deep of acquisition second is subsequent to the deep of acquisition and the number three is intercompany transactions alright I have four videos for business combination one for merger acquisition one for this this one and intercompany transactions for today Mogu fools mafia on merger or acquisition alright let's go to our problem for today alright okay actually murder a position must met Alicia compared to consolidation alright now this we'd given the multi so questions product as a result of the merger compute for the following that really good will letter begin on bird in purchase letter C net increase or decrease in the retained earnings of interval corporation the ready net increase or decrease in the stockholders equity of Pinnacle Corporation and letter e net increase or decrease in the identifiable assets of interval corporation Omega the following are the content statements of financial position of bread and feed on January 1 2008 but a sheet of bread and feet total assets liabilities ordinary shares share premium retained earnings cherrywood municipio le village internal equity parallel total let's compute the total equity of Brad and 50 so 3.1 and get your calculators novigrad 3.1 million plus one to fifteen thousand plus three one to five thousand you get seventy four seventy five thousand one delegate seven four seventy five thousand total equity of bread for fitnah man one two nine five thousand okay add hundred thousand plus eight six two five hundred you get two five seven total equity of v in eval court while the net assets of both Brad and pip now as you can see submission net assets I say in a merger acquisition actually you're buying the assets and liabilities you're not really buying the shares okay so now a table in an asset to see monogatari merger yet alright so both Brad and finian the novel you'll be needing EPFL we have to analyze them separately okay being cash in the amount of one eighty five thousand and assuming what I need 500 shares to Brad pay in cash the amount of 72 and by issuing five four three wishes to take away so basically I've eaten by deep interval to these two companies or cash and shares all right actually in IFRS 3 or in business combination and toggle to the level and they're the high risk high risk while NFL we call it the acquire alright so this can be you the part value of these shares is 30 per share and the market value is 40 per share sharing difference of 10 we call it the share people cannot share pH at Pinnacle Court also include the funding and paid expenses okay in the recklessness finder's fee accounting and legal fees for SEC registration printing costs of stock certificates in a palace retained earnings has a balance of 10 750 thousand on January 1 2015 beginning of the year immediately before the acquisition as a result the merger computed for the faculty so basically you so problem with even tying on balance sheet of a religion tie and how much you mean I'd the pinnacle to acquire Brad and fit as well as these expenses okay and again that said take a look at the questions you have the goodwill you have gained on bargain purchase by repainting stockholders equity and identifiable assets now let's start with goodwill ok in this problem come on separately not in the analyze deep breath and fit ok for Goodwill when I Nathan see breath hey what are they so sir how do you want it for the movie so basically and on you how much you mean I had nothing compared to how much you may receive data alright so for bread in a felt pain cash in the amount of what okay so cash hundred eighty-five thousand and then integral also issued shares of a to acquire Brad what I get five hundred better what do you use the par value or the market right obviously the market value all right normally I'm fired by an end so one eighty five hundred and dyscalculia twenty five hundred times for Pete you get separate 914 a so crash insurance left so we get the total was seventy nine forty thousand three and one eighty five thousand eight one two five thousand because this the total consideration given an array eighty one to five thousand now Kalani comparing attention to the fair value of net assets remembers a partnership Paragon adventure so fair value of net assets in this case mighty designed apology what do you mean by net assets just assets less liabilities or actually if we don't quit not a total earlier right because you've read you in an analyst at and this is the favored by apprentice at seven for 75,000 cousin Tina Mott's in have is a problem that the book value is different from the fair value and convenient balance sheet separately banker also in partnership you assume that it's a good value right arrow Berlin moment financial in the problem I believe al use of fair value so in that case we assume that the book value is equal in the fair value all right so we compare the fair value versus iteration given of one to five thousand to seven four seventy five thousand seven for 75,000 difference let's compute eight one to five thousand less seven for 75,000 we get 650 650 thousand all right now the analyst Athena okay team total denied it one to five thousand but you're getting only seventy four seventy five thousand it means you're paying something for an intangible I said we call it good bid right and so good you a goodwill is 650 thousand gets so you know if much potassium beam I had modified upon sedation given or transferred then the fair value of net assets means you're paying for something intangible we call it the goodwill 650,000 that's easy now let's go to fit the same analysis - 72 thousand at 70 mm and then shares okay 54 350 shares and forty per share your market value that's compute for 350 shares times 40 you get to 174 thousand to 174 thousand for the shares we add the seventy two thousand two two four six four six thousand total value of consideration transferred is looking for six thousand we compare the two the fair value of net assets fifty five seven five hundred okay two two five seven five hundred in this case most of our bannermen you've been a buyer nothing than the pair by petal is different because right now the difference is completed even some beauty for six thousand six thousand less two two five seven five hundred you get okay on top of App Engine this is a game on bargain purchase in vacant pipe we also call this game on acquisition alright same meaning answer if much more Baba you wanted Alicia transfer to the fair value of net assets and inference because gain on bargain purchase all right as you see class separate Natasha analyzes a different companies Union if Quinn owned by Moshe that seemed in Ramallah total cash plus total shares less total fvn a good you demo who am offer for party non-binary and álava some caramel agonda Java separately analyzed um alright final answers for goodwill 650,000 six 2004 the game on bargain purchase 11,500 obviously goodwill is an asset game on bargain purchase is an income statement right so then the bus yeah both of them dunes a consolidated F Estella all right actually one set up episode on manual merger gotta both of them alright so goodwill and given ready for this alright let's move on to question C net increase or decrease in retained earnings of Intel Corporation affecting within the release nothing [Music] shares for shares stock holders equity parent everything even into effect yeah right okay so this one right these are your expenses now question is a new treatment for each of this right you have indirect costs the finder speed county and legal fees for SEC registration printing costs of stocks or debates another dollar plus all costs related to incorporation are charged to additional premium capital or epic array in this case you related to incorporation or this last two items away we charge this to a pit indirect costs and finder's fee we charges to explain some these are expensed alright okay now since the question is about retained earnings or new Mass Effect not in there is obviously expenses you have two different you effectively which are I must share premium money alright so let's compute you indirect costs in finder's fee of bread and feet feet I know columnar who has a really ugly physical fitness physically active demeaning mentally after the Canadian rocket pinnacled meritum free personal training from sir graph using the workout program for sponsors served at field imagine class after review derecho passage in chest day every Monday various multi of three sets of 46 reps in between sets maximum business combination problems dozen ah ah ah ah I'm a I also expenses question is to retain earnings and ma'ruf again again new expenses so computing opinion total in the records and finder's fee of both bread and picked up alright so 93 750 is one plus 66 250 okay just 101 250 plus 35,000 you get 296 250 alright tonight six 250 class this is the total indirect cost and finder speak me now and women effect no repeater in is not a new number we're gonna do for question C expenses expenses negative Ian's expenses right 296 250 mm about the gaming bargain purchase yes you have the game on whirlwind purchase that's positive was again shot plus 11,500 let's compute the total to nine six 258 for seven net increase or decrease in retained earnings that's decrease decrease of 284 750 is a final answer for question C plus if you appreciate this free Hardy tutorial don't forget to subscribe and turn on the notification bell so you get notified whenever I have a new video all right let's move on to question the net increase or decrease in the stockholders equity of the Nevada Corporation and that their distaff holders equity by the caliph is a given how about the issuance of shares whether so my affections the stockholders equity is it a fart or at the market value well I think multiplying an opposite if at market value now consider another both the part value and the share video right so issuance of shares my issuance of shares to drag and fit how much a computer nothing after year so for Brad at seventy nine forty thousand where fitnah it's to 174 at NASA what else what will affect our stockholders equity how about you answer nothing for question C expenses so for expenses chambray no buy ingredients onions 2 9 6 to 2 e ended the game on bargain purchase that's 11 5 what else it's not holders equity how about the howdy and legal fees and preteen gossip stock certificates yes so is it charged and it's a traffic so debit a P right so go buy your equity nothing because of accounting individual pieces and three nickels of stuff sure it is let's compute the total charge topic 3 4 3 750 plus 1 in 5000 that's three six two five hundred okay plus 93 750 total is 900 Lada Niva total charge to optic 900 all right actually this is not that so let's compute the total effect the stockholders equity 798 a cement plus P 174 thousand minus 2 and 6 to 15 million six thousand six to the Silurian 5 - 9 mm and you get eight nine zero four this is positive increased question D so final answer a different question it's increase of the last question is that increase or decrease in the identifiable assets of Pinnacle corporation to affect you your total assets assets japonica we have in the class well even Tyner assets of blood and feasibility and the peanut butter so no bonus on your assets them to pompous name so Brad can ten to fifty fifty three zero five seven five hundred now again if even your fair value if the effective book value in fair value you use the fair value all right in this case were domination we assume that the value is equal to in fair value per grad it's ten to fifteen thousand now a forfeit it's neither actually palpable v05 server what else what's the what will affect our total assets how about um cashed up in iron right so these actions are to do the last EXO cash payment for Brad its 185 forfeited 72 okay this is happy 85,000 - Jen right what else how about these expenses yes the partnership Ella it's in our religions of problem and paid expenses payable pasilla potato vellum be careful and away to one window Pharaoh Mahajan government comedy in the example right so it means what I shall affect use the total assets right because liability Parashar alright so we compute ten to fifteen thousand then in 2000 plus 3 0 5 7 5 and minus 180 by 570 good counsel you get 13050 five hundred thirteen thirteen zero surviving cinnamon would we'll all right take a class in wording the dynamic depressed identifiable now a by definition goodwill is an unidentifiable assets okay if another idea and identifiable assets obviously answer mystics 50 good build right if the Halligan amended assets well as a good not then this one you add do build-up 650,000 that because the question is identifiable assets our final answer is 13050 500 business on increase everything you all right basically that's how you do a humping for merger or acquisition all right be careful and a lot about being a philosopher dancer right so he points to remembers in your eyes that you assume that Y is equal to fair value of sine ax you use the market value okay take note another an inexpensive shot and your classification if how do you know if it's expensive the you know if it starts to happen again if it's elevated to incorporation which are synaptic otherwise you charge to expense if expansion we know and the rector thickness between you're picking ranges and separate data analyzing read and civic all right the set for murder or residual versus the end of this free tutorial platic Impala Mian what is their housing treatment for contingent consideration what if the share premium is not enough to over in corporation costs what if and bag William good will estimate within one year what if after one you what if my pre-existing good will acquire II Deuteronomy Latvia and Abena well regardless of your accounting background will provide you with the most efficient and effective review by focusing on best review strategies key points to remember shortcuts on metrics and mistakes for reservation and to know more about us visit a website and Facebook page all the links are in the description below we serve now because we only accept a limited number of students in order to preserve the quality for review class dismissed see you next meeting