On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow: Parent Subsidiary Parent Company Company Value Cash 700,000 100,000 100,000 Inventory 300,000 50,000 55,000 PPE 1,000,000 350,000 365,000 Liabilities 500,000 200,000 200,000 Outstanding Shares 1,000,000 200,000 Retained earnings 500,000 100,000 Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow: INCOME AND RETAINED EARNINGS Parent Subsidiary Company Company Sales 800,000 550,000 Dividend income 40,000 Cost of sales (480,000) (250,000) Operating expenses (60,000) (150,000) Net income 300,000 150,000 Retained earnings, Jan 1, 2019 500,000 100,000 Dividends declared (100,000) (50,000) Retained earnings end 700,000 200,000 BALANCE SHEET Cash 300,000 125,000 Receivables 100,000 30,000 Inventory 650,000 45,000 Investment in Subsidiary 350,000 PPE 900,000 350,000 Total 2,300,000 550,000 Liabilities 600,000 150,000 Outstanding shares Retained earnings 1,000,000 200,000 700,000 200,000 Total 2,300,000 550,000 Additional Information: The undervalued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5- years. • Subsidiary Company owes Parent Company P5,000 on December 31, 2x19.
On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow: Parent Subsidiary Parent Company Company Value Cash 700,000 100,000 100,000 Inventory 300,000 50,000 55,000 PPE 1,000,000 350,000 365,000 Liabilities 500,000 200,000 200,000 Outstanding Shares 1,000,000 200,000 Retained earnings 500,000 100,000 Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow: INCOME AND RETAINED EARNINGS Parent Subsidiary Company Company Sales 800,000 550,000 Dividend income 40,000 Cost of sales (480,000) (250,000) Operating expenses (60,000) (150,000) Net income 300,000 150,000 Retained earnings, Jan 1, 2019 500,000 100,000 Dividends declared (100,000) (50,000) Retained earnings end 700,000 200,000 BALANCE SHEET Cash 300,000 125,000 Receivables 100,000 30,000 Inventory 650,000 45,000 Investment in Subsidiary 350,000 PPE 900,000 350,000 Total 2,300,000 550,000 Liabilities 600,000 150,000 Outstanding shares Retained earnings 1,000,000 200,000 700,000 200,000 Total 2,300,000 550,000 Additional Information: The undervalued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5- years. • Subsidiary Company owes Parent Company P5,000 on December 31, 2x19.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Prepare the worksheet for consolidation purposes and the related eliminating entries on January 1, 2019 and December 31, 2019
Transcribed Image Text:On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for
P350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow:
Parent
Subsidiary
Parent
Company
Company
Value
Cash
700,000
100,000
100,000
Inventory
300,000
50,000
55,000
PPE
1,000,000
350,000
365,000
Liabilities
500,000
200,000
200,000
Outstanding Shares
Retained earnings
1,000,000
200,000
500,000
100,000
Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow:
INCOME AND RETAINED EARNINGS
Parent
Subsidiary
Company
Company
Sales
800,000
550,000
Dividend income
40,000
Cost of sales
Operating expenses
(480,000)
(60,000)
300,000
(250,000)
(150,000)
Net income
150,000
Retained earnings, Jan 1, 2019
500,000
100,000
Dividends declared
(100,000)
(50,000)
Retained earnings end
700,000
200,000
BALANCE SHEET
Cash
300,000
125,000
Receivables
100,000
30,000
Inventory
650,000
45,000
Investment in Subsidiary
350,000
PPE
900,000
2,300,000
350,000
Total
550,000
Liabilities
600,000
150,000
Outstanding shares
Retained earnings
1,000,000
200,000
700,000
200,000
Total
2,300,000
550,000
Additional Information:
The undervalued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-
years.
• Subsidiary Company owes Parent Company P5,000 on December 31, 2x19.
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