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 balance sheet on January 1, were as follows: Assets Parent Subsidiary Company Company 30,900 34,200 22,900 179,000 37,400 9,100 16,100 40,000 10,000 112,600 Cash P Accounts receivable, net Inventories Equipment, net Patents Total Assets P 267,000 Liabilities and Equities Accounts Payable Bonds Payable Common stock, P10 par 4,000 100,000 100,000 15,000 48,000 267,000 P 6,600 50,000 15,000 41,000 112,600 Share Premium 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) 17,100 48,000 13,000 P ADDITIONAL INFORMATION: For the year ended December 31, the following results were given: Dividend Paid Net Income Parent Company 15,000 4,000 30,200 9,400 Subsidiary Company

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 balance sheet on January 1, were as follows: Assets Parent Subsidiary Company Company 30,900 34,200 22,900 179,000 37,400 9,100 16,100 40,000 10,000 112,600 Cash P Accounts receivable, net Inventories Equipment, net Patents Total Assets P 267,000 Liabilities and Equities Accounts Payable Bonds Payable Common stock, P10 par 4,000 100,000 100,000 15,000 48,000 267,000 P 6,600 50,000 15,000 41,000 112,600 Share Premium 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) 17,100 48,000 13,000 P ADDITIONAL INFORMATION: For the year ended December 31, the following results were given: Dividend Paid Net Income Parent Company 15,000 4,000 30,200 9,400 Subsidiary Company

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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