Acquirer Company acquired all the outstanding shares of Acquiree Company by issuing 50,000 shares of its P10 par value ordinary shares on July 1, 2022. The fair value of Acquirer’s share was P15. Acquirer also incurred P20,000 for legal fees and P15,000 for printing and registering the new shares. At the date of acquisition, Acquiree had the following balances: Assets – P850,000; Liabilities – P180,000; Share Capital – P500,000; Share Premium – P150,000; and Retained Earnings – P20,000. The carrying values of the identifiable assets and liabilities of Acquiree were equal to their fair values except for accounts receivable which was understated by P7,500 and plant assets with fair value lower than carrying value by P75,000. Assuming that Acquirer purchased the net assets of Acquiree, how much is the Increase in the Equity of Acquirer?
Acquirer Company acquired all the outstanding shares of Acquiree Company by issuing 50,000 shares of its P10 par value ordinary shares on July 1, 2022. The fair value of Acquirer’s share was P15. Acquirer also incurred P20,000 for legal fees and P15,000 for printing and registering the new shares. At the date of acquisition, Acquiree had the following balances: Assets – P850,000; Liabilities – P180,000; Share Capital – P500,000; Share Premium – P150,000; and Retained Earnings – P20,000. The carrying values of the identifiable assets and liabilities of Acquiree were equal to their fair values except for accounts receivable which was understated by P7,500 and plant assets with fair value lower than carrying value by P75,000.
Assuming that Acquirer purchased the net assets of Acquiree, how much is the Increase in the Equity of Acquirer?
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