11. YSL Corporation acquired 80% of the outstanding ordinary shares of GBX Company on June 1, 2020 for P586,250. GBX Company's shareholder's equity components at the end of this year were as follows: Ordinary shares, P100 par, P250,000; Share premium, P112,500 and Retained earnings, P222,5000. Non-controlling interest (NCI) is measured at fair value. All the assets of GBX were fairly valued, except for inventories, which is overstated by P11,000 and equipment, which is understated by P15,000. Remaining useful life of equipment is 4 years. Both companies use straight line method for depreciation and amortization. Shareholder's equity of YSL on January 1, 2020 is composed of Ordinary shares, P750,000; Share premium, P175,000 and Retained earnings, P525,000.
11. YSL Corporation acquired 80% of the outstanding ordinary shares of GBX Company on June 1, 2020 for P586,250. GBX Company's shareholder's equity components at the end of this year were as follows: Ordinary shares, P100 par, P250,000; Share premium, P112,500 and Retained earnings, P222,5000. Non-controlling interest (NCI) is measured at fair value. All the assets of GBX were fairly valued, except for inventories, which is overstated by P11,000 and equipment, which is understated by P15,000. Remaining useful life of equipment is 4 years. Both companies use straight line method for depreciation and amortization. Shareholder's equity of YSL on January 1, 2020 is composed of Ordinary shares, P750,000; Share premium, P175,000 and Retained earnings, P525,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
11 and 12
Transcribed Image Text:CHAPTER 3: CONSOLIDATION SUBSEQUENT To
DATE OF ACQUISI TION
20TTI2IUO
Page | 124
11. YSL Corporation acquired 80% of the outstanding ordinary shares of GBX Company on
June 1, 2020 for P586,250. GBX Company's shareholder's equity components at the end
of this year were as follows: Ordinary shares, P100 par, P250,000; Share premium.
P112,500 and Retained earnings, P222,5000.
Non-controlling interest (NCI) is measured at fair value. All the assets of GBX were fairly
valued, except for inventories, which is overstated by P11,000 and equipment, which is
understated by P15,000. Remainming useful life of equipment is 4 years. Both companies
use straight line method for depreciation and amortization. Shareholder's equity of YSL
on January 1, 2020 is composed of Ordinary shares, P750,000; Share premium, P175,000
and Retained earnings, P525,000.
Fair value of NCI on the date of acquisition is P117,500. Goodwill, if any, should be
written down by P14,225 at year end. Net income for the first year of parent and subsidiary
are P75,000 and P42,500 (from date of acquisition), respectively. Dividends declared at
the end of the year amounted to P20,000 and P15,000. There was no issuance of new
shares during the year.
What is the amount of non-controlling interest in net assets of GBX Company as of
December 31, 2020?
a. P145,167.50O
b. P127,242.50
c. P121,917.50
d. P124,242.50
12. Refer to #11, what is the amount of consolidated equity at the end of the year?
a. P1,520,345.50
b. P1,644,587.50
c. P1,462,262.50
d. P1,624,262.50
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