Compute for the parent’s portion of consolidated retained earnings on December 31, 2022. Do not forget the upstream and downstream if there is. On January 1, 2021, ABC purchased 90% of the outstanding shares of PQR by payingP740,000. On that date, PQR had P300,000 capital stock and P500,000 of retained earnings.An undervalued asset attributable to building amounting to P60,000 with a remaining life of 10years. All other assets and liabilities of PQR had book value approximated their fair marketvalue. On January 1, 2022, ABC's common stock and retained earnings amounted toP1,000,000 and P850,000 respectively, while PQR's retained earnings is P600,000. The 2022net income and dividends was as follows: ABC Net Income P340,000 and Dividend ofP100,000; PQR net income P150,000 and Dividends P50,000. On April 1, 2022, ABC soldmachinery with a book value of P30,000 to PQR for P60,000. The machinery is expected tohave a remaining useful life of five years from the date of the sale. On December 1, 2022, PQRcompany sold equipment with a book value at P72,000 to ABC for P60,000. The equipment isexpected to last for ten years from the date of sale.

Working note -1 Calculation of profit on sale of fixed assets from ABC to PQR-…

Answered: Compute for the parent’s portion of…

Compute for the parent’s portion of consolidated retained earnings on December 31, 2022. Do not forget the upstream and downstream if there is.

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

Compute for the parent’s portion of consolidated retained earnings on December 31, 2022. Do not forget the upstream and downstream if there is.

On January 1, 2021, ABC purchased 90% of the outstanding shares of PQR by paying
P740,000. On that date, PQR had P300,000 capital stock and P500,000 of retained earnings.
An undervalued asset attributable to building amounting to P60,000 with a remaining life of 10
years. All other assets and liabilities of PQR had book value approximated their fair market
value. On January 1, 2022, ABC's common stock and retained earnings amounted to
P1,000,000 and P850,000 respectively, while PQR's retained earnings is P600,000. The 2022
net income and dividends was as follows: ABC Net Income P340,000 and Dividend of
P100,000; PQR net income P150,000 and Dividends P50,000. On April 1, 2022, ABC sold
machinery with a book value of P30,000 to PQR for P60,000. The machinery is expected to
have a remaining useful life of five years from the date of the sale. On December 1, 2022, PQR
company sold equipment with a book value at P72,000 to ABC for P60,000. The equipment is
expected to last for ten years from the date of sale.

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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