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Acquirer Company issued 80,000 new shares of its P10 par value ordinary shares and paid cash of P2,400,000 for the 90% interest of Acquiree Company on January 2, 2022. The share of Acquirer was valued at P15. The stockholders' equity of Acquirer and Acquiree at the date of acquisition were as follows:

Acquirer Company issued 80,000 new shares of its P10 par value ordinary shares and paid cash of P2,400,000 for the 90% interest of Acquiree Company on January 2, 2022. The share of Acquirer was valued at P15. The stockholders' equity of Acquirer and Acquiree at the date of acquisition were as follows:

FINANCIAL ACCOUNTING
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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How much is the Consolidated Retained Earnings at December 31, 2022? * Acquirer Company issued 80,000 new shares of its P10 par value ordinary shares and paid cash of P2,400,000 for the 90% interest of Acquiree Company on January 2, 2022. The share of Acquirer was valued at P15. The stockholders' equity of Acquirer and Acquiree at the date of acquisition were as follows: Share Capital Share Premium Retained Earnings Acquirer 1,600,000 900,000 5,500,000 Acquiree 600,000 950,000 1,610,000 The fair value and book value of Acquiree's identifiable assets and liabilities were the same except for inventory which was undervalued by P50,000 and Equipment which was under depreciated by P100,000 with remaining useful life of 10 years. The parent elected to measure NCI using fair value method. At the end of December 31, 2022, Acquirer reported a net income of P300,000 and paid dividends of P50,000 while Acquiree reported a net income of P200,000 and paid dividends of P20,000. It was also determined that the goodwill was impaired by P30,000.
Transcribed Image Text:How much is the Consolidated Retained Earnings at December 31, 2022? * Acquirer Company issued 80,000 new shares of its P10 par value ordinary shares and paid cash of P2,400,000 for the 90% interest of Acquiree Company on January 2, 2022. The share of Acquirer was valued at P15. The stockholders' equity of Acquirer and Acquiree at the date of acquisition were as follows: Share Capital Share Premium Retained Earnings Acquirer 1,600,000 900,000 5,500,000 Acquiree 600,000 950,000 1,610,000 The fair value and book value of Acquiree's identifiable assets and liabilities were the same except for inventory which was undervalued by P50,000 and Equipment which was under depreciated by P100,000 with remaining useful life of 10 years. The parent elected to measure NCI using fair value method. At the end of December 31, 2022, Acquirer reported a net income of P300,000 and paid dividends of P50,000 while Acquiree reported a net income of P200,000 and paid dividends of P20,000. It was also determined that the goodwill was impaired by P30,000.
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