Compute for consolidated retainedearnings on December 31, 2021On January 1, 2021, ABC Co. acquired 80% interest in XYZ, Inc. byissuing 5,000 shares with fair value of P60 per share and par valueof P40 per share. XYZ's shareholders' equity as of January 1, 2021comprises the following:292,000Total liabilities120,000680,000Share capitalShare premiumRetained200,000(at carrying amounts)260,000Share capitalRetained earningsTotal equity200,000440,00096,000earnings176,000296,0001,380,000Total equity376,000On January 1, 2021, the fair values of the assets and liabilities ofXYZ, Inc. were determined by appraisal, as follows:CarryingTOTALLIABILITIES1,672,000496,000AND EQUITYXYZ, inc.Fair valueincrementатоuntsFair valuesCash20,00020,000Statements of profit or lossFor the year ended December 31, 2021Accounts receivable48,00048,000Inventory92,000124,00032,000ABC Co.XYZ, Inc.Equipment200,000240,00040,000Sales1,200,000480,000Cost of goods soldGross profitAccumulated(660,000)(288,000)192,000(40,000)(48,000)(8,000)depreciation540,000Accounts payable(24,000)(24,000)(160,000)(40,000)Depreciation expenseDistribution costsNet assets296,000360,00064,000(128,000)(72,000)Interest expenseProfit for the year(12,000)The remaining useful life of the equipment is 4 years. During 2021,no dividends were declared by either ABC or XYZ. There were alsono inter-company transactions. The group determined thatgoodwill is impaired by P4,000. ABC's and XYZ's individualfinancial statements at year-end are shown below:Statements of financial position As at December 31, 2021240,00080,000On acquisition date, ABC Co. elected to measure non-controllinginterest at fair value. A value of P75,000 is assigned to the non-controlling interest.ABC Co.XYZ, Inc.ASSETSCash92,000228,000Accounts300,00088,000receivableInventory420,00060,000Investment in300,000subsidiaryEquipmentAccumulated800,000200,000(240,000)(80,000)depreciationTOTAL ASSETS1,672,000496,000

Consolidated Retained Earnings -:Consolidated Retained Earnings are an element of shareholders'…

Answered: Compute for consolidated retained…

Business

Accounting

Compute for 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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