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For the year ended December 31, the following results were given:
Dividend Paid Net Income
Parent Company P15,000 P30,200
Subsidiary Company 4,000 9,400
Using the proportionate basis or partial
in consolidated net income) on December 31:
A. P 26,600 C. P 36,000
B. P32,090 D. P 44,100
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- 1. Matray acquired 16,000 ordinary shares of Petros on 1 April 20X9. On 31 December 20X8Petros’s accounts showed a share premium of $4,000 and retained earnings of $15,000. The fairmarket value of non-controlling interest at acquisition was $7,000.Below are the statements of financial position for the two companies as at 31 December 20X9:Matray PetrosNon-current assets:Property, plant and equipment 39,000 33,000Investment in Petros 50,000Current assets 78,000 40,000Total assets 167,000 73,000Equity and liabilitiesEquityOrdinary shares of: $1 each 100,000: 50c each 10,000Share premium 7,000 4,000Retained earnings 40,000 39,000Current liabilities 20,000 20,000Total equity and liabilities 167,000 73,000Required:Prepare the consolidated statement of financial position of Matray as at 31 December 20X9. Assumeprofits have accrued evenly throughout the yearOn 1 January 20X9, JB Enterprises acquired 70 per cent of the shares of Good Company. The separate condensed statements of financial position of JB Enterprises and of Good Company immediately after the acquisition appeared as shown below: (all amounts in €) JB Good Company Assets Property, plant and equipment (net) 18.750.000 2.600.000 Investment in Good Company 3.600.000 - Inventories 1.000.000 740.000 Cash 13.550.000 560.000 Trade and other receivables 4.400.000 660.000 41.300.000 4.560.000 Equity and Liabilities Share capital 10.000.000 2.000.000 Reserves 16.200.000 1.600.000 Profit for the year 20X4 1.600.000 240.000 Provisions 100.000 250.000 Current liabilities 13.400.000 470.000 41.300.000 4.560.000 Additional information (at acquisition…On January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 parcommon stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1,were as follows: Using the proportionate basis or partial goodwill method, compute the following:1. The amount of goodwill on January 1:A. P 2,600 C. P 14,400B. P 3,800 D. P 25,2002. The equity holders of parent (or controlling interest) retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,0003. The consolidated retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,000
- On January 1, 2018, Parent Co. acquired 80% of the ordinary shares of Subsidiary Co. for P1,000,000. At the time of acquisition, Subsidiary's Ordinary shares, share premium and retained earnings were P100,000, P400,000 and P500,000 respectively. The identifiable assets and liabilities of the Subsidiary were fairly valued. The assets of the Subsidiary included goodwill of P50,000. The following income statement data were prepared by Parent and Subsidiary on December 31, 2019: Parent Subsidiary 400,000 750,000 50,000 15,000 150,000 300,000 150,000 50,000 Sales Other income Cost of goods sold Operating expenses During 2019, the Subsidiary declared dividends of P50,000. The dividend received by the parent was recorded as part of dividend income (included in other income). On January 1, 2019, Parent purchaseda machine from the subsidiary for P40,000. This was carried at Subsidiary's books at P25,000. The remaining life of the machine was 5 years. Since the purchase date, Subsidiary Co.…Accounting On January 1, 2020, Parent Company purchased 80% of the common stock of Subsidiary Company for $320,000. On this date, Subsidiary had common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000, respectively. Net income and dividends for Subsidiary Company were $50,000 and $10,000, respectively. Parent Company has used the simple equity method for recording the Subsidiary income and dividends. On January 1, 2020, the only tangible assets of Subsidiary that were undervalued were inventory and equipment. Inventory was worth $5,000 more than cost. Equipment, which was worth $15,000 more than book value, has a remaining life of 5 years, and straight-line depreciation is used. Any remaining excess is goodwill. The following trial balances of the two companies are prepared on December 31, 2020. Parent Subsidiary Investment in Sub 352,000 Current Assets 132,000…The two following separate cases show the financial position of a parent company and its subsidiary company on November 30, 2019, just after the parent had purchased 90% of the subsidiary's stock: Case I Case II P Company S Company P Company S Company Current assets $ 880,000 $260,000 $ 780,000 $280,000 Investment in S Company 190,000 190,000 Long‐term assets 1,400,000 400,000 1,200,000 400,000 Other assets 90,000 40,000 70,000 70,000 Total $2,560,000 $700,000 $2,240,000 $750,000 Current liabilities $ 640,000 $270,000 $ 700,000 $260,000 Long‐term liabilities 850,000 290,000 920,000 270,000 Common stock 600,000 180,000 600,000 180,000 Retained earnings 470,000 (40,000) 20,000 40,000 Total $2,560,000 $700,000 $2,240,000 $750,000…
- Parent Company issued 80,000 new shares of its P10 par value ordinary shares and paid cash of P2,000,000 for the 80% interest of Subsidiary Company on January 2, 2022. The share of Parent was valued at P15. The stockholders’ equity of Parent and Subsidiary at the date of acquisition were as follows (see image below).The fair value and book value of Subsidiary’s identifiable assets and liabilities were the same except for inventory which was undervalued by P50,000 and Equipment which was underdepreciated by P100,000 with remaining useful life of 10 years. The parent elected to measure NCI using fair value method. At the end of December 31, 2022, Parent reported a net income of P300,000 and paid dividends of P50,000 while Subsidiary reported a net income of P200,000 and paid dividends of P20,000 to Parent. Only 75% of the beginning inventory of Subsidiary was sold during the period. It was also determined that the goodwill was impaired and to be reported at P800,000. a. How much is the…On January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 par common stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1, were as follows: REQUIREMENTS:Using the proportionate basis or partial goodwill method, compute the following: 1. The amount of goodwill on January 1:A. P 2,600 C. P 14,400B. P 3,800 D. P 25,200 2. The equity holders of parent (or controlling interest) retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,000 3. The consolidated retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,000From the given data, determine the NON-CONTROLLING INTEREST on December 31, 20x8. On January 1, 20x8,Parent Company purchased 80% of the outstanding shares of Subsidiary Company for P800,000. On the date of acquisition, Subsidiary Company reported Ordinary Shares of P800,000 and Retained Earnings of P200,000. Subsidiary’s Inventory was understated by P20,000; Equipment with a 5-year life was understated by P20,000, Building with an 8-year life was understated by P80,000 and land was understated by P40,000. The non-controlling interest is to be stated at fair value and the fair value of the non-controlling interest on January 1, 20x8 is P210,000. During the year, Parent sold goods to Subsidiary for P150,000 at a 25% mark-up and in turn purchased P200,000 of Subsidiary’s goods which Subsidiary sold at a 20% mark-up. From the goods purchased, P50,000 remain in Parent’s books at the end of the year, while P20,000 remain in Subsidiary’s books at the end of the year. 30% of the undervalued…
- Set out below are the draft income statements of P and its subsidiary S for the year ended 31 December 20X7. On the 1 January 20X6 P purchased 75% of the ordinary shares in S. Revenue Cost of sales and expenses Gross profit Operating expenses Profit from operations Finance costs Profit before taxation Tax Profit for the year P $000 300 (180) 120 (47) 73 73 (25) 48 "8ª6 | 8 | 8 | 5ª | 86 | ª S $000 150 (70) 80 (23) 57 55 (16) 39 During the year S sold goods to P for $20,000, making a mark up of one third. Only 20% of these goods were sold before the end of the year, the rest were still in inventory. P values non-controlling interest using the fair value method. Prepare the consolidated income statement for the year ended 31 December 20X7On January 1, 20x1, ABC Co. acquired 80% interest in XYZ, Inc. by issuing 5,000 shares with fair value of P30 per share and par value of P20 per share. The financial statements of ABC Co. and XYZ, Inc. immediately after the acquisition are shown below: Jan. 1, 20x1ABC Co. XYZ, Inc.Cash 20,000 10,000Accounts receivable 60,000 24,000Inventory 80,000 46,000Investment in subsidiary 150,000 Equipment 400,000 100,000Accumulated depreciation (40,000) (20,000)Total assets 670,000 160,000Accounts payable 40,000 12,000Bonds payable 60,000 -Share capital 340,000 100,000Share premium 130,000 -Retained earnings 100,000 48,000Total liabilities and equity 670,000 160,000 On January 1, 20x1, the fair value of the assets and liabilities of XYZ, Inc. were determined by appraisal, as follows:XYZ, Inc. Carrying amounts Fair values Fair value incrementCash 10,000 10,000 -Accounts receivable 24,000 24,000 -Inventory 46,000 62,000 16,000Equipment 100,000 120,000 20,000Accumulated depreciation (20,000)…On January 1, 20x1, ABC Co. acquired 80% interest in XYZ, Inc. by issuing 5,000 shares with fair value of ₱15 per share. On this date, XYZ’s equity comprised of ₱50,000 share capital and ₱24,000 retained earnings. NCI was measured at its proportionate share in XYZ’s net identifiable assets. XYZ’s assets and liabilities on January 1, 20x1 approximate their fair values except for the following:XYZ, Inc. Carrying amounts Fair values Fair value adjustments (FVA)Inventory 23,000 31,000 8,000Equipment (4 yrs. remaining life) 50,000 60,000 10,000Accumulated depreciation (10,000) (12,000) (2,000)Totals 63,000 79,000…