B.On January 1, 2021, LASER LTD. acquired 70% of outstanding ordinary shares of JUSTICE INC. at a price of P210,000. On the same date, the net assets of JUSTICE INC. were reported at P260,000. On January 1, 2021, LASER LTD. reported retained earnings of P2,000,000 while JUSTICE INC. reported retained earnings of P200,000. All the assets and liabilities of JUSTICE INC. are fairly valued except machinery, which is undervalued by P80,000 and inventory which is overvalued by P10,000. The said machinery has remaining useful life of five years while 40% of the said inventory remained unsold at the end of 2021. For the year ended December 31, 2021, LASER LTD. reported net income of P1,000,000 and declared dividends of P200,000 in the separate financial statements while JUSTICE INC. reported net income of P150,000 and declared dividends of P20,000 in the separate financial statements. LASER LTD. accounted the investment in JUSTICE INC. using cost method in the separate financial statements. Compute for the consolidated retained earnings on December 31, 2021.

B.On January 1, 2021, LASER LTD. acquired 70% of outstanding ordinary shares of JUSTICE INC. at a price of P210,000. On the same date, the net assets of JUSTICE INC. were reported at P260,000. On January 1, 2021, LASER LTD. reported retained earnings of P2,000,000 while JUSTICE INC. reported retained earnings of P200,000. All the assets and liabilities of JUSTICE INC. are fairly valued except machinery, which is undervalued by P80,000 and inventory which is overvalued by P10,000. The said machinery has remaining useful life of five years while 40% of the said inventory remained unsold at the end of 2021. For the year ended December 31, 2021, LASER LTD. reported net income of P1,000,000 and declared dividends of P200,000 in the separate financial statements while JUSTICE INC. reported net income of P150,000 and declared dividends of P20,000 in the separate financial statements. LASER LTD. accounted the investment in JUSTICE INC. using cost method in the separate financial statements. Compute for the consolidated retained earnings on December 31, 2021.

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

B.On January 1, 2021, LASER LTD. acquired 70% of outstanding ordinary shares of JUSTICE INC. at
a price of P210,000. On the same date, the net assets of JUSTICE INC. were reported at P260,000. On
January 1, 2021, LASER LTD. reported retained earnings of P2,000,000 while JUSTICE INC. reported
retained earnings of P200,000.
All the assets and liabilities of JUSTICE INC. are fairly valued except machinery, which is undervalued
by P80,000 and inventory which is overvalued by P10,000. The said machinery has remaining useful
life of five years while 40% of the said inventory remained unsold at the end of 2021.
For the year ended December 31, 2021, LASER LTD. reported net income of P1,000,000 and declared
dividends of P200,000 in the separate financial statements while JUSTICE INC. reported net income
of P150,000 and declared dividends of P20,000 in the separate financial statements. LASER LTD.
accounted the investment in JUSTICE INC. using cost method in the separate financial statements.
Compute for the consolidated retained earnings on December 31, 2021.

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