ABC Corp owns 60% of the outstanding shares of GHI Company, which it purchased for P42,000 above underlying book value of P604,800 on December 31, 2021. For the year 2024, GHI included in its net income P75,600 of unrealized gain on a year-end sale of depreciable assets to ABC. The non-controlling interest of GHI was computed for P10,080 of income in the 2024 consolidated financial statements. The purchase difference allocated to building which is amortized over 20 years. Compute for the reported net income of GHI Company from its own operation, if the net income of ABC from its own operation for 2024 amounted to P157,500.

ABC Corp owns 60% of the outstanding shares of GHI Company, which it purchased for P42,000 above underlying book value of P604,800 on December 31, 2021. For the year 2024, GHI included in its net income P75,600 of unrealized gain on a year-end sale of depreciable assets to ABC. The non-controlling interest of GHI was computed for P10,080 of income in the 2024 consolidated financial statements. The purchase difference allocated to building which is amortized over 20 years. Compute for the reported net income of GHI Company from its own operation, if the net income of ABC from its own operation for 2024 amounted to P157,500.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 02, 2021, Parent Corporation purchased 80% of SUBSIDIARY Company’s ordinary shares for P648,000. P30,000 of the excess (aggregate of consideration and NCI over the book value of net assets) is attributable to goodwill and the balance to an equipment with an economic life of ten years. Non-controlling interest is measured at its fair value on date of acquisition. On the date of acquisition, stockholders’ equity of the two companies were as follows: PARENT Corporation SUBSIDIARY Company Ordinary shares P1,050,000 P240,000 Retained earnings 1,560,000 P420,000 On December 31, 2021, SUBSIDIARY Company reported net income of P105,000 and paid dividends of P36,000 to Parent. Parent reported earnings from its own operations of P285,000 and paid dividends of P183,000. Goodwill had been impaired and should be reported at P20,000 on December 31, 2021. What is the non-controlling interest in profit of SUBSIDIARY Company on December 31, 2021? What is…
Victoria Corp acquired 80 per cent of the share capital of Whitehorse Corp on 1 July 2019. As at the date of acquisition, Whitehorse’s retained earnings was $40,000. On this date, the fair value of the 20% non-controlling interest in Whitehorse was $25,000. Ignore the tax rate. The statements of the financial position of Victoria Corp and Whitehorse Corp as at 30 June 2020 are as follows: Victoria Corp ($) Whitehorse Corp ($) Current assets 320,000 168,000 Non-current assets: Property, plant and equipment 190,000 36,000 Investment (in Whitehorse) 100,000 - 290,000 36,000 610,000 204,000 Current liabilities 270,000 94,000 Shareholders’ equity: Share capital…
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2020, when Scenic had a net book value of $630,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $6,000 per year. Placid Lake's 2021 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $530,000. Scenic reported net income of $340,000. Placid Lake declared $160,000 in dividends during this period; Scenic paid $63,000. At the end of 2021, selected figures from the two companies' balance sheets were as follows: Placid Lake Scenic Inventory $ 370,000 $ 113,000 Land 830,000 430,000 Equipment (net) 630,000 530,000 During 2020, intra-entity sales of $190,000 (original cost of $88,000) were made. Only 20 percent of this inventory was still held within the consolidated entity at the end of 2020. In 2021, $320,000 in intra-entity sales were made…
Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $941, 800 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,177,250. Also at the acquisition date, Stanford's book value was $546, 100. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Items Book Value Fair Value Trade names (indefinite life) $ 300, 900 $ 360, 900 Property and equipment (net, 8-year remaining life) 233, 600 262, 400 Patent (14-year remaining life) 120, 900 154, 500 For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Accounts Plaza Stanford Revenues $ (795, 100) $ (782,600) Cost of goods sold 439, 600 331, 000 Depreciation expense 186, 400 29, 200…
Goku Corporation is an 80% owns subsidiary of Vegeta Corporation. In 2018, Goku sold land net cost of P30,000 to Vegeta for P50,000. Vegeta held the land for 8 years before selling it in 2019 to Frieza Company, an unrelated entity, for P110,000. The consolidated income statement of Vegeta and its subsidiary in 2019, Goku, will show a gain on the sale of land of: 80,000 60,000 32,000 48,000
Placid Lake Corporation acquired 90 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2020, when Scenic had a net book value of $610,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $4,000 per year. Placid Lake's 2021 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $510,000. Scenic reported net income of $320,000. Placid Lake declared $200,000 in dividends during this period; Scenic paid $61,000. At the end of 2021, selected figures from the two companies' balance sheets were as follows: Placid Lake Scenic Inventory $ 350,000 $ 111,000 Land 810,000 410,000 Equipment (net) 610,000 510,000 During 2020, intra-entity sales of $180,000 (original cost of $84,000) were made. Only 30 percent of this inventory was still held within the consolidated entity at the end of 2020. In 2021, $300,000 in intra-entity sales were made…
V Corp. owns 70% of F Corp’s ordinary shares. On August 1, 2020, F Corp. sold a machine to V Corp. for P290,000. The carrying amount of the machine is P170,000 and has a remaining life of 8 years. Due to this intercompany transaction, compute the net adjustment (increase/decrease) in the consolidated net income attributable to the non-controlling interest for 2020. * A. Answer not given B. P1,875 increase C. P6,250 increase D. P34,125 decrease E. P43,750 decrease
Ocean, Inc. acquired 15% of River Co. on January 1, 2022 for $94,500 and appropriately accounted for the investment using the fair-value method. On January 1, 2023, Ocean purchased an additional 20% of River for $180,000, achieving the ability to exert significant influence over River. On that date, the fair value of River's common stock was $900,000 in total. River's January 1, 2023, book value equaled $680,000, although land was undervalued by $40,000. Any additional excess cost over fair value was attributable to an undervalued patent with a 6-year remaining life. During 2023, River reported net income of $168,000 and paid dividends of $40,000. Based on the above information, use the prospective approach to account for the change to the equity method and determine the following numbers. (a) The amount of annual excess amortization for 2023. Answer: (b) The amount of equity income that Ocean should report for 2023. Answer: (c) Compute the balance of Investment in River account at the…