Class, our discussion for today is about business combination. Okay, business combination, for me ito na yung pinakamahirap na topic in AFAR. Okay, so it means, pag nagets yung discussion natin, pag naiintindihan nyo yung business combi, then I'm very confident na kayang-kaya nyo yung AFAR industry payboard exam.
Sounds good? Okay, now. References natin for this topic are IFRS 3 and IFRS 10. And okay, so let's start our discussion.
We have two types of business combination. Number one, we have merger. And number two, we have consolidation. When you say merger, it's A plus B is equal to A or B.
And for consolidation, it's A plus B. is equal to C. Let's start with merger.
So ano yung ibig sabihin ng A plus B? Ibig sabihin, class, si A and si B nag-merge sila or nagsama sila. And is equal to A or B, it means, isa lang sa kanila yung matitira. So let's say, class, si A yung natira sa kanila. It means, si A mag-continue siya mag-operate, si B mag-stop siya mag-operate.
Okay? Ang tawag natin kay A is the surviving entity. Now, ang magandang example dito class Naalala nyo ba nung in-acquire ni Grab si Uber?
I think way back in 2018 So in-acquire ni Grab yung operations ni Uber sa Southeast Asia So Grab plus Uber is equal to Grab Okay? So, si Grab, nag-ooperate pa rin siya sa Philippines. Si Uber, hindi na. Okay? Kaya wala ng Uber Philippines.
Is equal to Grab. Okay? Ang tawag nating class kay Grab is the acquirer. Siya yung bumili, acquirer.
Si Uber naman, siya si acquiree. Ayan. So, yan yung merger. Alright?
Let's go to consolidation. Sir, ano ibig sabihin ng A plus B? Si A and si B, nag-consolidate sila, nagsama sila, nag-form sila ng new entity. New entity which is C. Alright?
So let's have an illustration. For example, class, anong nangyari? Instead, Grab acquires 51% of the outstanding shares of Uber.
Okay, so shares yung binili. 51%, which is more than 50%. Ang tawag natin dyan, class, is consolidation. Mag-create sila ng new entity. For example, ang tawag, ang pangalan ng new entity is si GU Corporate.
or Grab-Uber Corporation. So si Grab, si B, si Uber. Okay?
So ang difference nila, class, compared sa merger, in consolidation, mag-ooperate pa rin si Grab, mag-ooperate pa rin si Uber, and meron silang new corporation which is GU Corporation. Okay? Iyan yung consolidation. Alright. Now.
Si Grab, okay, or si A, sa example natin, tawag pa rin sa kanya si Acquirer, okay? Pero mas tinatawag siya as Parent. Si B or si Uber, ang tawag pa rin sa kanya is Acquiry, kasi siya yung binili. Pero mas tinatawag siya as Subsidiary, okay?
So, ibig sabihin, class, basta may nabasa ka na Parent and Subsidiary, we're talking about consolidation. Gets? Okay.
Now, sir, paano ba na- accomplished yung merger na yan and consolidation. Accomplished through, okay, so merger, usually klasa nangyayari dyan is through asset acquisition. Sa example natin, si Grab, bibili niyo yung assets, acquires assets, and i-assume yung mga liabilities. Assumes liabilities. Alright?
So again, pag merger, since mag-i-stop yung isa dyan, Isa lang yung magsusurvive, bibili niya yung asset, okay? Ia-assume yung liabilities. On the other hand, kapag naman plus consolidation, usually, it is accomplished through stock acquisition. Kung sa merger, assets yung ina-acquire, inaga-assume ng liabilities, dito naman, class, shares yung binibili.
Alright? Kaya example ko kanina, 51% of the outstanding shares of Uber. Alright? Now, class, very important dito na dapat more than 50%.
Because magkakaroon ka lang ng consolidation kapag meron kang control. And we know in accounting, pag yung ownership mo is more than 50%. the voting shares or the outstanding shares, may presumption na meron kang control. Okay? Ayan.
So again, asset acquisition, stock acquisition. Now, so klastik na natin, ilang set of financial statements yung kailangan i-prepare. Pag-merger and pag-consolidation.
Every December 31. So take note, class. Sa merger, isa lang yung matitira sa'yo. Dito si A.
Dama? So it means, sa December 31, isa lang yung set of financial statements na kailangan mo i-prepare. Which is, F-S ni A. Does that make sense? Dito naman, class, sa consolidation, mag-ooperate pa rin si A, mag-ooperate si B, and meron pang isang new entity.
Ibig sabihin, three sets of financial statements yung kailangan natin i-prepare diendo, of the year. Si A, si B, and si C. Okay?
So, class, yung ginawa ko illustration dito, assuming dalawang companies lang. Pero actually, it can be two or more. Pwede yung tatlo, pwede yung apat, pwede yung lima, and so on. Okay?
Para mas madali, dalawa lang yung assume natin. So, again, merger, isa lang. One set of FS, consolidation, three sets of financial statements.
Okay, so class, FYI pala, Share ko lang sa inyo na yung merger and consolidation na yan, actually maraming nangyayari na ganyan in the Philippines. Ang tawag dyan is merger and acquisition. In 2019, FYI, merong 44 M&A transactions or merger and acquisition transactions.
And usually, sa nag-handle niyan, yung mga advisory arm of mga audit firms and yung mga mga bangko. So may mga asset management or mga... investment banking arm of the banks, large banks in the Philippines, sa linagahan ng mga mergers and acquisitions.
So in 2019, may 44 M&A transactions. Ang value niya, class, is 812 billion pesos. So marami yan.
Malaki yung mga transactions na yan. Kasi companies na nagbibilihan niya. In 2020, actually mas tumaas.
Naging 909 billion pesos. And actually, class, yung M&A na yan, ang nagre-regulate dyan, ang nag-oversee dyan is... the PCC or the Philippine Competition Commission.
So basically, ina-assess nila, ina-evaluate nila kung, well, dapat ba i-allow yung merger or consolidation na ito. Actually, class, kaya naging malaking issue yung acquisition ni Grab kay Uber kasi virtually, na-monopolize na ni Grab yung TNVS industry dito sa Philippines. Nama, wala. Kasi si Uber yung direct competitor niya, kaya sobrang laking issue niyan. Anyway, sinashare ko lang, class, para lang mapakita ko sa inyo na In real life, dito sa Philippines, marami talagang ganyan.
Okay? And ang pinakamalalaking merger recently, no? In acquisitions, si San Miguel Corporation, binili niya si Holcim Philippines.
Are you familiar with Holcim Philippines, yung cement company? Okay? And then si Udena Corporation, under Dennis Uy, binili niya yung Wendy's, binili niya yung Contis, binili niya yung Family Mart.
And also si SM. Actually kasi si SM, bumili siya ng... shares ni Goldilocks.
Ang gusto ni SM gawin, bilhin niya yung majority shares ni Goldilocks. And actually, under review pa yan ng PCC as of today. Alright? So anyway, class, gusto ko lang ma-appreciate nyo na talagang nangyayari yan sa Philippines. So maraming nangyayaring ganyan.
Okay, now. Sir, medyo may overview na kami about merger and consolidation. Sir, paano yung accounting yan?
How do we account for business combination? Under IFRS 3, ang gagamitin natin ng method class is what you call acquisition method. Listen very carefully. Sobrang important ang acquisition method.
Basically, meron tayong three steps under acquisition method. Step number one, identify the acquirer. Identify the acquirer.
Sir, sinulit si acquirer siya yung entity, the entity that obtains control over the acquiree. Okay? So, important dito, class, yung word na control.
Identify the acquirer. There's a first step. The entity that obtains control over the acquirer.
So, class, sa illustration natin, sino dyan yung acquirer? Si Grab or si Uber? Obviously, si Grab. Okay? Kasi siya yung nag-control kay Uber in the Philippines.
Si Uber naman, siya si acquirer. Okay? So, madali lang yung first step. Kaya-kaya yan. Second step.
Determine. The acquisition date. Okay?
Acquisition date. Sir, ano yung acquisition date? The date, sulat nyo muna, on which the acquirer obtains Control of the acquiree.
So kung kailan niya na-control si acquiree? Usually ang class, kapag nagpirmahan na ng contract, pag may signing of contract na, or pag may transfer of assets and liabilities na, iyan yung date of acquisition. Very important yung acquisition date or date of acquisition because at this date, Diyan natin minimesure yung fair value of assets and liabilities of the acquiree.
Dito. Diba? In-acquire ni Uber yung assets ni Uber and in-assume niya yung liabilities.
Kailan minimesure yung fair value niyan? Acquisition date. Kaya very important yan.
And number three is recognize. And measure goodwill or gain on bargain purchase or GBP. Ulitin ko. Recognize and measure. Ito yung step 3. Goodwill or gain on bargain purchase.
Okay, very important. So listen very carefully. Sa step 3 na yung class, may formula na ginagamit dyan. Nasa IFRS 3 to.
Okay? Sulat yung muna ito, class. Dalawa lang i-compare natin.
Two amounts lang. Number one, consideration transferred. Consideration transferred, class, tawagin natin yung city. Okay? Para mas maikli na lang later.
Plus, non-controlling interest. Let's call this NCI, non-controlling interest, plus previously held equity interest, and then ito total natin yan, class. Total natin yan.
Gets? Okay. So, consideration transferred, plus non-controlling interest, plus previously held equity interest, ito total natin yan.
Iko-compare natin yan dito. Number two. Kukumpir natin yan sa fair value of net identifiable assets. Or let's call this FVNIA.
Fair value of net identifiable assets. Now, class. Again, dalawang amounts lang yan. Kukumpir natin. Dalawa lang yung pwede mo sinaryo dyan.
If, number one, is greater than number 2. Okay? Meron tayong tinatawag na goodwill. Okay?
So ano ba yung number 1? Basically, class, yung number 1 na yan, iyan yung pinambayad natin. Okay?
Yung number 2, iyan yung binibili natin. So pag mas malaki yung binayad natin sa binibili natin, we are paying for something intangible. Ang tawag natin dun is goodwill.
For example, class, yung calculator na to. Yung... Yung binayad natin dito is 600. Pero yung value lang talaga niya is 500. Sobra yung binayad natin.
Yung difference na 100, it's because of the goodwill. Gets? And we know yung goodwill, pinapresent mo yan in the balance sheet as asset. On the other hand, if mas ma-laki naman si number 2 kay number 1, okay?
Meron naman tayo class na tinatawag na gain on bargain purchase. Let's say yung fair value ng calculator is 500. Nabili ko lang ng 400. Ibig sabihin, nakatipid ako. Naka-bargain ako.
Yung bargain na yan, or yung gain na yan, pinapresent natin in PNL. Okay? So, ayan. Know this by heart, no?
Kailangan alam na alam mo yan in business combination. Now, lalagyan ko ng details. Dito muna tayo sa consideration transfer.
Okay lang, class, maglagay ako ng footnote. Lagay ko A, okay? And then lalagay ko dito yan. So it means I'm referring to consideration transfer, clear? Alright.
When you say consideration transfer, basically, iyon yung pinambayad natin. So si Grab, paano niya binili si Uber? Well, Majority, ang binayad nyo dyan, cash.
Pwede rin na ang pambayad mo is non-cash assets. Or pwede ka mag-issue ng shares, equity. Pwede ka rin mag-issue ng debt or bonds.
Or pwede rin na contingent consideration. Okay? Contingent consideration. Now, okay tayo sa cash, non-cash assets, shares, bonds. Sir, ano yung ibig sabihin ng contingent consideration?
Ganti yung class. For example, this is Gen 1. This is December 31. Inacquire ni Grab si Uber dito. Tama? Ito yung assume natin, consolidation. It means nag-ooperate pa rin si Grab and si Uber sa Philippines.
Okay? Binili dito. So ang pinambayad, cash, non-cash assets, shares, for example, nag-issue ng 5,000 shares. Alright? Nag-issue ng bonds, and then may contingent consideration.
Ang usapan nila, okay, sabi ni Grab, sige, mag-iissue ako ng additional 1,000 shares sa'yo if mapag-generate ka ng net income amounting to 100 million at the end of the year. Dito nila usapan yan. Ang tawag natin dun, class, is contingent consideration.
It means, yung additional consideration, yung additional shares, in this case, 1,000, mangyayari lang yan kapag na-reach ni Grab yung usapan nila, which is mag-generate siya ng net income ng 100 million. Nag-usap sila dito, contingent siya upon happening of a future event. Kaya tawag dyan is contingent consideration.
Remember, class, contingent consideration is part of your... Consideration transferred. Gets?
Okay. Kaya tinawag siyang contingent. Okay? Ibig sabihin, dependent siya on future event.
Alright. Ito pa yung isang important dito, class. Sa consideration transferred, tandaan mo, it excludes, all caps ko ha, para, underline ko pa, excludes, acquisition, Related costs.
Nalitin ko, consideration transferred excludes acquisition related costs. So ano yung example ng acquisition related costs? For example, class, finder's fee or yung mga commission. What else?
Professional fees or you also call this due diligence fees. Yung mga due diligence fees, klase, ito yung mga advisory fees. Kasi pinapa-audit mo din yan.
So, magbabayad ka ng audit fees sa mga audit firms, legal fees, and so on. Ang tawag natin dyan, professional fees or due diligence fees. Ito yung ginagamit na term dyan, due diligence fees.
Okay? What else? Pwede rin mag-incur na ng general administrative costs and cost of registering, and issuing.
Okay. So, ulitin ko, class. Tandaan mo, ha?
Hindi ito kasama sa consideration transferred. Therefore, hindi siya makaka-apekto sa goodwill or gain on bargain purchase computation natin. Alright? Bakit, sir?
Kasi, class, yung first three na yan. Okay. Yung first three na yan.
Tandaan mo, ha? Expensed yan. Okay?
So, dito ko na lagay. Expensed. Charge mo sa expense lahat yan. Okay?
Ito namang, yung last na yan, cost of registering and issuing, depende, class, kung ano yung in-issue mo. Pwede ka mag-issue ng shares or pwede ka mag-issue ng bonds. Tama?
Kapag shares ang in-issue mo, class, i-charge mo muna yan sa APIC. Alam mo yan, sa FAR, tama? Ang tawag natin dyan is stock issuance costs. Tama?
Pag stock issuance costs, charge mo sa APIC. Pag naman plus, bonds yung in-issue mo, kasi pwede yung shares. Pwede yung shares, pwede yung bonds. Pag bonds yung in-issue mo, ang tawag natin dyan is bond issuance costs. I-charge natin yan either to discount on bonds payable or premium on bonds payable.
In this case, tataas yung discount mo, kasi debit discount. Credit cash. Pag premium naman, bababa yung premium mo kasi normal balance yan is credit, debit premium, credit cash. Ulitin ko klas, pag acquisition related cost, huwag mo isasama sa consideration transferred. It means, pag ganyan, it's either expense mo yan or pag shares in issue mo, charge mo sa APIC, pag bonds, charge mo sa discount or premium.
Okay? Consideration transferred excludes acquisition related cost. Ulit-ulit ko sinabi kasi maraming nakakalimot yan. Anyway.
So, okay na tayo dito. Check na yan. Sir, what do you mean by NCI or Non-Controlling Interest?
Ganito yung class. For example, si parent, binili niya si subsidiary. Ayan. Dito. Consolidation.
Parent and subsidiary gamitin natin. Example. Ang binili niya class is 80% of subsidiary. Alright?
So, in this case, sino klas yung may-ari kay subsidiary? Well, yung subsidiary, owned siya by 80% ni parent. Ang tawag natin kay parent, controlling interest.
Sir, bakit controlling? Kasi meron siyang control, more than 50%. 80%, okay?
That's more than 50%. Ngayong class, yung 20%, ang may-ari niyan is si NCI, si Non-Controlling Interest. Kaya tinawag na non-controlling kasi less than 50%. Got it? Okay, so ganyan siya.
Ngayong class, meron ka lang NCI pag ang binili ni parent is less than 100%. Tama? Kasi pag binili ni parent 100% of the subsidiary, wala kang NCI. So may NCI ka lang if ang binili is less than 100%. Now class, yung NCI can be measured in two ways according to IFRS 3. Okay?
Dalawa yan. Can be measured at Nandahan mo ito. So later may handouts tayo. So sagot i-apply natin lahat yan. Pwede mo siyang imeasure at fair value or proportionate share in acquiries.
Net assets. Later, i-apply natin yan. Susulat mo muna. Pero basically, meron kang option.
Option yan actually. Meron kang option as acquirer kung paano mo i-measure yung NCI. Pwede yung at fair value or...
proportionate share. Tandaan mo lang, fair value or proportionate share. Okay, yan muna.
Sir, ano yung previously held equity interest? So that's letter to letter B to letter C. Dito natin lagay. Previously held equity interest. Kanto yung class.
Ang tawag mo din dito is business combination achieved in stages. Bakit sir? For example, class ng year 1. Si parent, ang binili niya, okay, 15% of the subsidiary.
15% lang. Though, actually, since less than 50% yan, hindi mong pwedeng tawagin na parent and subsidiary. But let's say, si P, binili niya yung 15% of S.
Okay, so 15%, syempre, pwede yung FBPL, pwede yung FBOCI, whatever. So, what happened yung year 1? Yung year 2 naman, class, bumili ng additional...
40% si P kay S. Okay? So ano na yung total?
55%. Ibig sabihin, noong year 2, nagkaroon na ng control si parent kay subsidiary. Ibig sabihin ng previously held equity interest, ito yung class.
Yung 15% na yan. Ano yung previously held? Previous year. Okay? Equity interest, yung 15%.
Ibig sabihin, class, yung 15% na yan, yung fair value niyan. Actually, at fair value. Yung fair value of that 15%, kasama siya sa formula natin. Makaka-apekto siya dun sa total. Therefore, ma-apekto yung computation natin ng goodwill or gain.
Alright? So, and then, last one is ito. Fair value of net identifiable assets or letter DN. Okay, tagyan natin D.
Dito natin lagay. Well, obviously, ang mahalaga class na matanda mo sa fair value of net identifiable assets, since net. identifiable assets yan, both assets and liabilities. So assets, less liabilities yung kukumputi natin at fair value. Take note, at fair value.
Okay? Not at book value. So nakikita dito, not book value. Alright?
Kaya fair value, okay na tayo dyan, hindi tayo hindi yung book value. Net identifiable. Sir, ano ibig sabihin ng identifiable?
Ibig sabihin niyang class, i-exclude mo yung goodwill. Excludes goodwill of acquiree. For example, si Grab, si Uber, meron siyang existing goodwill. Hindi mo isasama yun dito sa FBNIA. Bakit sir?
Kasi si goodwill, yung existing goodwill, unidentifiable yan. Tama? So, hindi mo isasama.
Lahat lang ng identifiable. Got it? So, again, ulitin ko. Di ba?
Assets and liabilities. Tama? Yung assets, pag may nakita kang goodwill dyan, huwag mo isasama sa goodwill competition. Tatanggalin mo yan kasi nakalagay sa standards, dapat identifiable. Okay.
Alright, so yun yung mga kailangan mong tandaan mo na. So yun, apply muna natin yan sa problem number one. Get your handouts.
Problem number one class is about merger. Okay? So ito, re-retain ko yan kasi yun yung important. Ito, pwede ko nang erase. Make sure na-copy nyo siya.
Dahan-dahan yung gagawin natin ng discussion class. So, handouts muna tayo. Let's go to problem 1. It's about merger.
Actually, maganda sa problem 1. Dalawang companies yung binili. Okay, so again, sabi ko, pwedeng two or more companies. So, ayan.
Very comprehensive yung problem number 1 natin. Alright. Okay. Let's take a look at the requirements muna. As a result of the merger, compute for the amount of number one, goodwill, number two, net increase or net decrease in retained earnings.
In the statement of financial position of Z Corporation, net increase or decrease in the stockholder's equity, net increase or decrease in identifiable assets of Z Corporation. Okay, let's read the given. The following are the condensed statement of financial position of X and Y on January 1, 2021. Okay, so for X, total assets, meron siyang liabilities, meron siyang ordinary shares, share premium, and retained earnings. Class, pwede ba natin i-total yung equity? Ordinary shares, share premium, and retained earnings.
So total natin, for X, 3.1 million plus 1,250,000 plus 3,125,000, write it down, you should get 7,475,000. So lagay muna, total equity of X, 7,475,000. Let's do the same thing for Y. Ordinary shares, 1,295,000. Plus share premium, 100,000.
Plus 862,500 retained earnings, you should get 2,257,500. So write it down. Total equity of Y, 2,257,500.
Alright? Sige. Z Corp acquired the net assets of X and Y. Okay.
So si Z, ang tawag natin sa kanya, siya si acquirer. Ang tawag natin kay X and Y, sila yung acquiree. Tama? By paying cash in the...
amount of 185,000 and by issuing shares. Ayun. Yung consideration transfer.
Pwede yung cash, pwede yung shares. Tama? Okay. In the amount of 72 and by issuing shares. The par value of these shares is 35. So, encircle that.
Yung par value is 35. Market value is 40. So, par value and market value. Z Corporation also incurred the following unpaid expenses. Underline mo yung unpaid.
Indirect costs, finder's fee, accounting and legal fees for SEC registration, printing cost of stock certificates. Okay. Ang tawag natin dito, acquisition related costs.
Excluded yan. Okay. Bakit sir? Kasi class, yung indirect costs and finder's fee, expense mo yan. Ayun, expense.
And then, yung accounting and legal fees for SEC registration. Tama? And then, printing cost of stock certificate, issuing. Siyempre, pag nag-i-issue ka ng shares, merong stock certificate yan.
So, bisabim, yung accounting and legal fees plus the printing cost of stock certificates, charge mo yan sa APIC. Gets? So yung first two items, charge natin sa expense. Yung next two, yung accounting and legal fees and printing costs, charge natin sa APIC.
Z-Street in earnings, sa balance of P10,750,000 on January 1, immediately before the acquisition. As a result of the merger, compute for the amount of the following. Okay, number one muna, goodwill. Sir, paano ulit yung goodwill? Compare mo lang yung binayad mo sa binibili mo.
Ganun lang siya. Okay? Consideration transferred. Actually, walang NCI dito kasi merger to. May NCI ka lang kapag consolidation, pag shares yung binibili mo.
Dito, merger. So, assets and liabilities. Inacquire yung assets, in-assume yung liabilities.
So, basically, ang i-confirm mo lang dyan, class, consideration transferred plus fair value of net identifiable assets. Ganito gagawin ko dyan. Okay, tayo dito, ha?
So, problem number one. So, yun. Doon muna tayo kay X. Pagsamayan na natin.
Dito si X, dito si Y. Okay. So, consideration transferred, CT na lang. Ano yung binayad natin?
Well, kay X. Nagbayad tayo ng cash na doon sa middle portion of the problem. Nakita nyo dyan, class?
By paying cash in the amount of 185,000. Nakita nyo yan? Okay. Ano pa yung binayad natin?
Shares. Okay. Ilan?
198,500. So, compute with me. 198,500 times the fair value. Siyempre, fair value dapat. Times 40, yung fair value.
7,940,000. Okay? You should get 7,940,000. Okay. 185 plus 7,940,000.
Total is 8,125,000. Doon naman tayo kay Y. Si Y, ang binayad natin is 72,000 cash.
And then, ilang yung shares? 54,350. 54,350 times 40, the fair value, 2,174,000. 2,174,000.
Total natin yung class, 2,174 plus 72,000, you get 2,246,000. Ano yung class? yung consideration transfer, yung total. Now, compare natin yan sa fair value of net identifiable assets.
Assets, less liabilities, di ba yun rin yung equity? Tama. Nakompute natin earlier kung ano yung equity. And for this one, hindi sinabi na iba yung fair value at book value.
If silent yung problem, assume natin na equal yung book value and fair value. Gets? Okay. So it means, yung fair value of net identifiable assets of X is just yung equity niya, which is 7,475,000.
And si Y naman, 2,257,500. Ayan, na-compute natin earlier yan. So, tingin natin class. Si X, so 8,125,000, less 7,475,000, you get 650,000.
Plus, ano yung 650? Is it goodwill or is it a gain? Actually, ito yung binayad mo, 8125. Mas malaki yung binabayad mo sa binibili mo. Therefore, you have a goodwill. 650,000, goodwill.
Okay? Dito naman kay Y, 2246,000 less 2257,500, you have 11,500. Okay? Yung binayad mo is 2,246, binibili mo is 2,257, nakatipid ka, nakabargain ka. That's why this is a gain-on-bargain purchase.
Ang tanong sa ating class, number one, how much daw yung goodwill? Answer natin sa number one is 650,000 goodwill. So, ibabox ko class yung mga final answers, ha? So, yun yung sagot mo sa number one.
Okay? Goodwill of 650. Take note, wagong pagsasamayan. Alright, separate natin kinumpute. Tandaan mo yan? Let's go to number two.
How much daw yung net increase or decrease in retirement? Plus actually, mas maganda kung ipakita ko yung journal entries para mas maliwanag. Journalize natin.
Okay, so binili natin si X. Tama? Point of view tayo ni Z, ni acquirer. Bili natin si X.
Journal entry number one. Acquire natin yung assets ni X. Debit assets. 10,250,000.
Okay. Assume natin yung liabilities na X. Credit liabilities, 2,775,000. Ano yung binahid natin? Credit cash, 185,000.
Yung shares na in-issue natin, so credit common stock, syempre at par value muna. Ilan yung shares na in-issue natin? 198,500.
198,500, yung par value class, nandun sa middle portion, 35 times 35, 6,947,500. Tama? 6,947,500. Ayan.
And then, credit APIC. Yung fair value is 40, par value is 35, therefore yung APEC is 5 pesos per share. 198,500 times 5, 992,500.
Okay, 992,500. And then, compute tayo ng goodwill, debit goodwill, 650,000. Yun.
Yun yung journal entry dyan. Okay. Next is, dito naman tayo kay Y.
Alright? Ito yung kay X. Ito yung kay Y. Binili natin si Y.
Take note up sa bookstore ni Z. Binili natin si Y debit assets for 3,0 5,7 500 and then in-assume natin yung liabilities ni Y 800,000 Binayad natin cash amounting to 72,000. Okay. Nag-issue tayo ng shares. Credit common stock.
Ilan yung shares natin class? Inissue kay Y. 54,350.
Tama? 54,350. Par value natin is 35 times 35. 1,902,250.
1,902,250. Compute natin yung APIC. We issued shares.
54,350 shares times 5. Okay, yun yung uptake natin. 5 pesos per share, 2,71,750. 2,71,750. And then, na-compute natin class, meron tayong gain on bargain purchase. Credit yan.
Credit GBP, 11,500. Take note na yung goodwill asset yan. Tama?
Yung gain on bargain purchase, income statement item yan. Kasi gain. Ayan? So, ito yung entries natin.
Okay. Alright, so tingin natin class. Lagyan na rin natin ng entry yung... Okay.
yung indirect cost, finder's fee, and so on and so forth. Sige, dun tayo kay X. Add natin class yung indirect cost and finder's fee. 93,750 plus 66,250. Nakompute mo ba yung 160,000?
Tama? So again, isicharge siya sa expense yan. Debit expense, credit cash, 160,000. Ano tawag natin dyan?
Acquisition related costs. Pag ganyan, charge nyo sa expense. Pag related sa registering and issuing, charge natin sa APIC. Okay, so doon naman tayo sa accounting and legal fees. Kaya X muna tayo.
343,750 plus 125,000. Okay, actually unpaid pala yung nakalagay. So accounts payable pa rin to.
Nakita mo ba dyan, nakalagay dyan, Zcorp also incurred the following unpaid expenses. So i-charge natin sa accounts payable. Hindi cash. Okay. So, ulit natin.
Accounting and legal fees, P343,750. Plus, printing cost, P125,000. Because, related dyan sa registering and issuing shares, i-charge natin yan sa APIC. P468,750. Debit APIC.
Okay. Journal entry number 3, debit APIC. Since unpaid pa yan, accounts payable, P468,750.
Ayun. Ayan, 4,6,750, that's 4x. Doon naman tayo kay Y. Indirect cost ni Y, 101,250. Plus finder's fee, 35,000.
Nakompute mo yung 1,36,250. Debit expense, credit cash. Or sorry, accounts payable kasi unpaid pa. 1,36,250.
1,36,250. Okay. Now, doon naman tayo sa accounting and legal fees, P36,500 plus printing cost, P93,750.
Nakompute nun ba yung P456,250? Okay. So, P456,250, charge siya niya sa APIC, pero take note class.
Yung APIC natin, ito lang. Kulang. 4, 5, 6, 250 yung na-compute natin. Tama?
Eh, 2, 7, 1, 750 lang yan. Dito naman kanina, yung APIC natin is 9, 9, 2, 500. Enough siya to cover this. Okay lang.
Enough yan. Ito hindi eh. So, ang rule class, pag kulang yung APIC, okay, na-initial ng shares, i-charge mo sa retained earnings yung balance.
Naku mo yan? Okay. So, APIC muna. New issuance of shares. And then, tsaka mo i-charge sa RE pag kulang pa.
Okay? Huwag mo gagamitin yung old shares ha. Yung apik sa old shares.
Hindi. Yung new shares. Ito.
And then RE. So, ang entry natin dyan, debit apik. Credit accounts payable.
Because unpaid pa. Tanggalin natin yan. 2, 7, 1, 7, 50. And then, ano? Compute natin earlier.
4, 5, 6, 2, 50. Tama? Debit retained earnings. Credit accounts payable.
4, 5, 6, 2, 50. Minus 2, 7, 1, 7, 50. 184,500 This is 184,500 Ganun siya So again, ang hierarchy natin Charge mo na sa APIC Charge mo na sa APIC Pag kulang yung APIC Charge mo sa retained earnings Ito Ngayon Gets? Okay. O, yan yung complete entries natin. Pinakita ko lang, class, para mas ma-appreciate nyo. Again, problem one to.
So, comprehensive yung discussion ko. Later, mabilisan na lang tayo. Let's go to next question.
Net increase or decrease in retained earnings? So, lagay natin question number two. Okay.
Retained earnings. Tingnan natin, class. Net increase or decrease?
Ano ba, sir, yung makaka-apekto ng retained earnings? Well, tingnan natin. Tama ba yung indirect cost makaka-apekto yan?
Kasi charged sa expense yan eh. Tama. Charge sa expense, baba yung retained earnings mo. So, add natin class. Indirect cost ni X, 93,750.
Indirect cost ni Y, 101,250. 195,000. So, deduction yan.
What else? Yung find... Finder's fee.
Kasi expense din yan. Therefore, bawas sa retained earnings yan. Finder's fee, 66,250 plus 35,000, you get 101,250.
So expense o negative, 101,250. What else? Ito pa.
Huwag mo kalimutan yan. Diba? Bawasan yung RE mo dyan eh. 184,500. Lagay natin dyan, class, yung stock issuance costs.
na exists, okay? 184,500. Okay, ito yung huwag mo kakalimutan.
Yung gain on bargain purchase. Okay, again, income statement item yan. Therefore, eventually, papasok ng RE yan. So, GBP natin, increased by... Yung RE mo mag-i-increase by 11,500.
Tama? Sige. Add natin yan.
195,000 plus 101,250 plus 184,500 minus 11,500. You get 469,250. 469,250. Since negative yan, therefore decrease. Answer natin?
Decrease by 469,250 yung retained earnings natin. This is our answer for question number 2. Question number 3. Net increase or decrease in the stockholders'equity of Z Corporation. Okay, stockholders'equity of Z Corporation. Ganito gagawin ko dyan, class.
Tama ba nag-issue tayo ng shares? Tama, nag-issue tayo. So issue ones of shares, nasa nyo? Ito. Issue tayo, actually ito.
7,940 and 2,174. Sa entry natin, ito siya. Okay, so add natin. 7,940 plus 2,174,000. Yung issue natin ng shares, 10. 4,000.
Siyempre, increase ng equity yan. Tama? Increase ng equity. Ngayon, ano yung mag-decrease ng equity natin? Well, yung mga sinarge natin to APIC.
Ito. Acquisition-related cost. Nag-i-release dito.
Acquisition-related costs or yung mga stock issuance costs. Nice. Oh, yes.
Bababa yung shareholders'equity. Actually, class, lahat ng binigay sa atin dito na acquisition-related costs, magdi-decrease ang shareholders'equity yan. Bakit, sir? Kasi yung in-expense mo, di ba, bababa yung RE mo. Yung RE is part of shareholders'equity.
So, bababa din yung shareholders'equity mo. Ngayon, yung sinarge mo sa APIC, Chinarge mo sa RE, okay? Bababa din yung equity mo. So, lahat ng given dyan, bababa yung shareholder's equity natin.
So, pwede nating i-add lang lahat ng acquisition-related cost for X and Y. Does that make sense? Doon mo tayo kay X. Finder's fee, 93,750.
Plus, sorry, indirect cost, 93,750. Finder's fee, 66,250. accounting and legal fees, 343,750.
Add din natin yung printing cost tax certificate, 125,000. For X, na-compute ko dito, class, 628,750. Does that make sense? Okay. 628,750, magdi-decrease yan ang shareholders equity natin.
Tama? Okay. So, the same thing for Y, 101,250, indirect cost, finder's fee, 35,000.
Accounting and legal fees, 362,500. Printing costs, 93,750. You should get 592,500.
592,500, decrease din yan ng shareholders'equity. Huwag mong kalimutan, okay? Huwag mong kalimutan yung gain on bargain purchase. Madalas makalimutan yan.
Gain on bargain purchase, pupunta ng income statement yan. Therefore, Tataas yung shareholders equity mo. Okay?
10,114,000 minus 628,750 minus 59,2500 plus 11,500. Final answer natin dito klas 8904,250. 8904,250. Since positive, increase yan. Increase in shareholders equity, 8904,250.
Let's go to question number four. Net increase or decrease in the identifiable assets of Z Corporation. Take note, this is a merger. So, ibig sabihin, ina-acquire ni Z yung assets ni X and Y. Since nag-debit tayo dyan ng assets, mapupunta sa atin yan.
Mapupunta kay Z yan. So, natagay ko dito yung assets ni X and Y. So, that is 10,250,000. And then, 305,700 for Z.
Ayan. What else? 307,500. And then, don't forget, class, na nagbayad tayo ng cash. Tama ba?
Nagbayad ka ng cash. So, ibig sabihin, bawas yan sa assets natin. Right? So, cash. How much yan?
185,000 for X. And then kay Y naman, you have 72,000. Right? So, ayan.
So, plus to, plus yung assets, minus yung binayad natin ng cash. Plus, take note, na makukuha natin dyan, 10,250,000 plus 3,057,500 minus 1,85,000 minus 72,000. Answer mo dito, class, is increase by 13,050,500.
13, 050, 500. Okay. Take note. Hindi ko sinama yung goodwill na 650,000 kasi nakalagay dyan, class, net increase or net decrease in the identifiable assets. Alam natin, class, yung goodwill is defined in IS-38, intangible assets, as unidentifiable assets. Okay.
So, lagyan dito yung goodwill. unidentifiable assets yan. Kaya huwag mo i-sasama. Pero last take note, pag ang nakalagay sa problem, net increase or decrease in the assets, pag wala nakalagay na identifiable, pag nakalagay in the assets, i-sasama mo yung goodwill, meron kang pang plus 650,000 dito. Okay?
And also, class, take note din na accounts payable yung kanina. Accounts payable. Kung hindi yan accounts payable, syempre, bawas din sa cash natin yan.
Tama? Therefore, yung increase lang ng assets natin, yung in-acquire natin kay X and Y, and yung... yung binayad mo sa shares ni X and Y. Or yung binayad mo kay X and Y. 185 and 72. Final answer, increased by 13050, 500. Ulitin ko lang, klasa.
Pag sinabi yan, pag assets lang yung term, yasama yung goodwill. Pag sinabi yung identifiable, huwag may sasama yung goodwill. Alright.
So, number one is application of merger. So, problems two onwards, puro consolidation tayo. So, let's have a short break.