FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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
REQUIREMENTS:
USING THE ADDITIONAL INFORMATION WHAT IS THE AMOUNT OF THE:
a. The investment balance on December 31
b. Dividend Income for the year
c. Non-controlling interest in net income on December 31
Transcribed Image Text:Subsidiary
Company
P 37,400
9,100
16,100
40,000
10,000
P 112,600
Assets
Parent
Company
P 30,900
34,200
22,900
179,000
Cash
Accounts receivable, net
Inventories
Equipment, net
Patents
P 267,000
Total Assets
Liabilities and Equities
P 6,600
P 4,000
100,000
100,000
15,000
48.000
P 267,000
Accounts Payable
Bonds Payable
Common stock, P10 par
50,000
Share Premium
15,000
41.000
P 112,600
Retained earnings
Total Liabilities and Equities
At the date of acquisition, all assets and liabilities of Subsidiary Company have book value approximately equal to
their respective market values except the following as determined by appraisal as follows:
Inventories (FIFO method)
Equipment (net-remaining life 4 years)
Patents (remaining life 10 years)
P17,100
48,000
13,000
ADDITIONAL INFORMATION:
For the year ended December 31, the following results were given:
Parent Company
Subsidiary Company
Dividend Paid
P15,000
4,000
Net Income
P30,200
9,400
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- Parent Co. acquired 90% of the common stock of Subsidiary Co. in a cash-only transaction. In the first consolidated balance sheet issued after this business combination, the noncontrolling interest must be reported as O A. Current assets. O B. Noncurrent assets. O C. Equity. O D. Noncurrent liabilities.arrow_forwardCompany P acquired 90 percent of the common stock of Company S on 1/1/2020. During 2020, Company S reported a net income of $50,000 and dividends of $12,000. Company P uses the simple equity method to account for the investment in S. Which of the following entries is prepared by Company P when consolidating the financial statements for 2020? Debit Subsidiary Income $45,000, Credit Investment in S $45,000 Debit Investment in S $45,000, Credit Subsidiary Income $45,000 Debit Dividends Receivable $10,800, Credit Subsidiary Income $10,800 Debit Subsidiary Income $10,800, Credit Dividends Declared $10,800arrow_forwardPagle Corporation holds 80 percent of Standard Company's common shares. The companies report the following balance sheet data for December 31, 20X1: Assets Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Investment in Standard Company Stock Total Assets Liabilities and Owners' Equity Accounts Payable Taxes Payable Preferred Stock ($10 par value) Common Stock: $10 par value $5 par value Retained Earnings Total Liabilities and Owners' Equity Pagle Corporation $ 53,000 85,000 126,000 700,000 (295,000) 160,000 $ 829,000 Basic earnings per share Diluted earnings per share $ 120,000 79,000 200,000 100,000 330,000 $ 829,000 Required: Compute basic and diluted EPS for the consolidated entity for 20X1. Note: Round your answers to 2 decimal places. Standard Company $ 43,000 65,000 76,000 330,000 (130,000) $ 384,000 $ 84,000 100,000 An 8 percent annual dividend is paid on the Pagle preferred stock and a 12 percent dividend is paid on the Standard…arrow_forward
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