Answered: Assuming that Consolidated Financial…

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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Question

Parent and Sub Inc had the following balance sheets on December 31, 2021 (see image below). On January 1, 2022 Parent purchased all of Sub Inc’s Common Shares for P40,000 in cash. On that date, Sub’s Current Assets and Fixed Assets were worth P26,000 and P54,000, respectively.

1. Assuming that Consolidated Financial Statements were prepared on that date, the Current Assets of the combined entity should be valued at how much?

Parent
P 60,000
100,000
P160.000
P 42,000
20,000
90,000
8,000
P160.000
Sub
P10,000
60.000
P70.000
P35,000
12,000
12,000
11,000
P70.000
Current Assets
Fixed Assets (net)
Total Assets
Current Liabilities
Bonds Payable
Common Shares
Retained Eanings
Total Liabilities and Equity

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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