Business Combination

Formulas

1.) Noncontrolling interest

Priority 1 = Fair value of NCI given to the problem but it should not be lower than the NCI - measured at
Non-controlling interest's proportionate share of Subsidairy's identifiable net assets @ Fair Value.

If fair value of NCI given to the problem is lower than NCI measured at proportionate share
of Subsidiary's identifiable net assets use the latter.

Compuation of NCI measured in proportionate share of Subsidiary's identifiable net assets.

Subsidiary net assets at Fair Value xxx
Multiply by: Noncontrolling interest x%
Fair value of NCI proportionate share in Subsidiary identifiable net assets xxx

Priority 2 = If Fair value of NCI is not given or unknown

Acquistion cost xxx

Divided by: Controlling interest x%
Total fair value of business xxx
Multiply by: Noncontrolling interest x%
Fair value of Noncontrolling interest xxx

Note: But again the computed Fair value of Noncontrolling interest should not be lower than
than the fair value of NCI in proportionate share in Subsidiary's identifiable net assets.

Note: We apply whichever is higher rule: Part of the new provision, NCI should not have
an amount that is lower than the fair value of NCI measured in proportionate share in
Subsidiary's identifiable net assets. We use whichever is higher.

2.) Result of acquisition

Acquisition cost (Consideration paid) xxx

FMV of NCI xxx
FMV of old investment in same company acquired ( less than 50%), included xxx
Contingent liabiilty xxx
Total xxx
Less: FMV of Subsidiary Net Assets (100%) xxx
Goodwill/Gain from acquisition xxx

3.) Consolidated total Assets

Parent total assets (book value) xxx

Subsidairy total assets (fair value) exclusive of goodwill, if any xxx
Goodwill - result from acquisition xxx
Payment - taken from the assets of the acquirer (xxx)
Consolidated total assets xxxx
4.) Consolidated retained earnings

Parent retained earnings before acquisition xxx

Add: Gain from acquistion, if any xxx
Total xxx
Less: Expenses (Direct cost, indirect cost) xxx
Consolidated retained earnings xxx

5.) Consolidated common stock

Parent common stock before acqquisition xxx

Add: New issued shares to acquire subsidairy @ Par value xxx
Consolidated Common Stock xxx

6.) Consolidated additional paid in capital

Parent additional paid in capital xxx

Add: New issued share to acquire subsidiay - excess of par xxx
Total xxx
Less: Stock issue cost, if any xxx
Consolidated additional paid in capital xxx

7.) Consolidated stockholders' equity

Consolidated common stock xxx

Consolidated additional paid in capital xxx
Consolidated retained earnings xxx
Noncontrolling interest xxx
Consolidated stockholders' equity xxx