On January 3, 2021, ABC acquired 60% of the outstanding shares of JKL an excess of cost over bookvalue of P3,000,000. This excess was allocated to property, plant and equipment with 10 years ofestimated useful life which half was already use. For the year ended December 31, 2022, JKL preparedthe following condensed financial statements:Statement of Financial PositionCurrent AssetsP2,250,000 LiabilitiesP1,000,000Property,Plantand12,500,000 Share Capital8,500,000Equipment, netAccumulated Profits5,250,000TotalP14,750,000 TotalP14,750,000Statement of Accumulated ProfitsAccumulate Profits, BegP5,000,000SalesP2,500,000(1,250,000)(750,000)Cost of Goods SoldOperating ExpensesNet IncomeP500,000Dividends(250,000)Accumulated Profits, EndP5,250,000JKL regularly sells merchandise to ABC at a price of 120% of cost. In 2021 and 2022, sales from JKL toABC are as follows: Sales-2021 for P2,100,000 (inventory sold by ABC 1,800,000); Sales -2022P1,200,000 (inventory unsold by ABC P750,000). On December 31, 2022 compute for the non-controllinginterest in Net assets. Compute for the Profit attributable to Equity Holders of Parent or ControllingInterest in Net Income.

Solution: The profit attributable to the parent entity is determined based on the adjusted net…

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Business

Accounting

Compute for the Profit attributable to Equity Holders of Parent or Controlling

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On January 3, 2021, ABC acquired 60% of the outstanding shares of JKL an excess of cost over book
value of P3,000,000. This excess was allocated to property, plant and equipment with 10 years of
estimated useful life which half was already use. For the year ended December 31, 2022, JKL prepared
the following condensed financial statements:
Statement of Financial Position
Current Assets
P2,250,000 Liabilities
P1,000,000
Property,
Plant
and
12,500,000 Share Capital
8,500,000
Equipment, net
Accumulated Profits
5,250,000
Total
P14,750,000 Total
P14,750,000
Statement of Accumulated Profits
Accumulate Profits, Beg
P5,000,000
Sales
P2,500,000
(1,250,000)
(750,000)
Cost of Goods Sold
Operating Expenses
Net Income
P500,000
Dividends
(250,000)
Accumulated Profits, End
P5,250,000
JKL regularly sells merchandise to ABC at a price of 120% of cost. In 2021 and 2022, sales from JKL to
ABC are as follows: Sales-2021 for P2,100,000 (inventory sold by ABC 1,800,000); Sales -2022
P1,200,000 (inventory unsold by ABC P750,000). On December 31, 2022 compute for the non-controlling
interest in Net assets. Compute for the Profit attributable to Equity Holders of Parent or Controlling
Interest in Net Income.

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