Compute for the total contribution of Ace

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Problem - Ace, Belle and Charlie agree to combine. Denise, the new corporation, will issue 5% fully participating preferred shares and common shares, both with a par value of P25. Relevant data are presented below:

 

Ace

Belle

Charlie

Assets

600,000

900,000

1,000,000

Liabilities

200,000

100,000

200,000

Expected annual earnings

36,000

80,000

96,000

Denise shall issue preferred shares for net assets transferred and ordinary shares for the difference between to shares entitled and preferred shares received. Earnings are to be capitalized at 8%.

Required -

1. Compute for the total contribution of Ace?

2. Compute for the total amount of goodwill?

3. How many ordinary shares of stock will be issued to Charlie?

4. Assume goodwill is to be recorded, prepare entries in the books of Denise?

Reference no: EM132815755

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