All the assets and liabilities of JICHU INC. are fairly valued except machinery, which is undervalued by P80,000 and inventory which is overvalued by P10,000. The said machinery has remaining useful life of five years while 40% of the said inventory remained unsold at the end of 2021. For the year ended December 31, 2021, LISAYAH LTD. reported net income of P1,000,000 and declared dividends of P200,000 in the separate financial statements while JICHU INC. reported net income of P150,000 and declared dividends of P20,000 in the separate financial statements. LISAYAH LTD. accounted the investment in JICHU INC. using cost method in the separate financial statements
On January 1, 2021, LISAYAH LTD. acquired 70% of outstanding ordinary shares of JICHU INC. at a
price of P210,000. On the same date, the net assets of JICHU INC. were reported at P260,000. On
January 1, 2021, LISAYAH LTD. reported
retained earnings of P200,000.
All the assets and liabilities of JICHU INC. are fairly valued except machinery, which is undervalued
by P80,000 and inventory which is overvalued by P10,000. The said machinery has remaining useful
life of five years while 40% of the said inventory remained unsold at the end of 2021.
For the year ended December 31, 2021, LISAYAH LTD. reported net income of P1,000,000 and
declared dividends of P200,000 in the separate financial statements while JICHU INC. reported net
income of P150,000 and declared dividends of P20,000 in the separate financial statements. LISAYAH
LTD. accounted the investment in JICHU INC. using cost method in the separate financial statements.
Requirement:
Compute for the consolidated retained earnings on December 31, 2021.
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