On January 1, 2018, Parent Co. acquired 80% of the ordinary shares of Subsidiary Co. for P1,000,000. At the time ofacquisition, Subsidiary's Ordinary shares, share premium and retained earnings were P100,000, P400,000 andP500,000 respectively. The identifiable assets and liabilities of the Subsidiary were fairly valued. The assets of theSubsidiary included goodwill of P50,000.The following income statement data were prepared by Parent and Subsidiary on December 31, 2019:Parent Subsidiary400,000750,00050,00015,000150,000300,000150,00050,000SalesOther incomeCost of goods soldOperating expensesDuring 2019, the Subsidiary declared dividends of P50,000. The dividend received by the parent was recorded as partof dividend income (included in other income). On January 1, 2019, Parent purchaseda machine from the subsidiaryfor P40,000. This was carried at Subsidiary's books at P25,000. The remaining life of the machine was 5 years.Since the purchase date, Subsidiary Co. bought merchandise from Parent Co. and the selling price of Parent Co. was125% on cost. Intercompany sales during the year 2018 totaled P150,000. The inventory held by Subsidiary Co.acquired from Parent was P15,000 on January 1, 2018 and P18,000 on December 31, 2018.36. What is the consolidated net income attributable to parent to be reported in the consolidatedstatement of comprehensive income at December 31, 2019?A. 469,520B. 469,400C. 471,800D. 511,80037. What is the non-controlling interest net income to be reported in the consolidated statement ofcomprehensive income at December 31, 2019?A. 40,000B. 40,600C. 43,000D. 42,880

Name: On January 1, 2018, Parent Co. acquired 80% of the ordinary shares of
Uploaded: 2024-03-04T10:43:15.000Z
Channel: Bartleby
Description: On January 1, 2018, Parent Co. acquired 80% of the ordinary shares of Subsidiary Co. for P1,000,000. At the time ofacquisition, Subsidiary's Ordinary shares, share premium and retained earnings were P100,000, P400,000 andP500,000 respectively. The i

Consolidation - When an asset oscillates between a well-defined pattern of trading levels, it is…

Business

Accounting

On January 1, 2018, Parent Co. acquired 80% of the ordinary shares of Subsidiary Co. for P1,000,000. acquisition, Subsidiary's Ordinary shares, share premium and retained earnings were P100,000, P P500,000 respectively. The identifiable assets and liabilities of the Subsidiary were fairly valued. The Subsidiary included goodwill of P50,000. The following income statement data were prepared by Parent and Subsidiary on December 31, 2019: Parent Subsidiary 750,000 400,000 50,000 15,000 300,000 150,000 150,000 50,000 Sales Other income Cost of goods sold Operating expenses During 2019, the Subsidiary declared dividends of P50,000. The dividend received by the parent was re of dividend income (included in other income). On January 1, 2019, Parent purchased a machine from

On January 1, 2018, Parent Co. acquired 80% of the ordinary shares of Subsidiary Co. for P1,000,000. acquisition, Subsidiary's Ordinary shares, share premium and retained earnings were P100,000, P P500,000 respectively. The identifiable assets and liabilities of the Subsidiary were fairly valued. The Subsidiary included goodwill of P50,000. The following income statement data were prepared by Parent and Subsidiary on December 31, 2019: Parent Subsidiary 750,000 400,000 50,000 15,000 300,000 150,000 150,000 50,000 Sales Other income Cost of goods sold Operating expenses During 2019, the Subsidiary declared dividends of P50,000. The dividend received by the parent was re of dividend income (included in other income). On January 1, 2019, Parent purchased a machine from

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: nuary 5, 20x9, Parent Company acquired 80% of the outstand 000. The financial statements of Parent…

A: Consolidated Balance sheet P Assets Cash (300,000+125,000) 425,000 Receivables (100,000+30,000-…

Q: Parent and its 70% owned Subsidiary report the following at December 31 of the current year: Parent…

A: General Journal Debit Credit Gain on sale of Equipment 20,000 Retained…

Q: ABC Co. acquired 60% interest in DEF Co. On January 1,2021. Information on the combining entities'…

A: Consolidated total assets is defined as the net book value of all the assets of the company as well…

Q: Up and its 80 percent–owned subsidiary (Down) reported the following figures for the year ending…

A: Requirement 1:

Q: Required On the 2021 consolidated balance sheet, what value should be reported for land?

A: The consolidated balance sheet is used to show the financial position of the parent company as well…

Q: On 30 June 2021 Parent Ltd acquired 100 per cent of the shares in Subsidiary Ltd for a cost of…

Q: On the 1/01/x3, J Group acquired 2 025 000 of the 4 500 000 ordinary R1 shares in Entity PA for R5…

A: The objective of the question is to calculate the group's investment in associate figure in its…

Q: Determine the amount of Goodwill to be recognized in the consolidated balance sheet at the date of…

A: Goodwill refers to the positive difference between the purchase consideration paid by the parent…

Q: 1. The profit attributable to equity holders of Power for 2019 is 2. The consolidated Net income…

A: Consolidated net income is the sum of income of parent and subsidiary. The income of parent is fully…

Q: ow much is the non-controlling interest in profit of Subsidiary Company on December 31, 2019?

A: Step 1 Non controlling interest is minority holding stake which is the portion of equity ownership…

Q: Subsidiary Company had common stock of P350,000 and retained earnings of P490,000. Parent Inc. had…

A: Consolidated Net Assets would be calculated as Net assets of Parent Inc. before acquisition plus…

Q: On 1 July 2020, Sky Ltd acquired 70% of the share capital (ex. div.) of Jim Ltd for $500,000. At…

A: Part 2: ExplanationIn Step 1, we calculated the NCI share of Jim Ltd's equity on the acquisition…

Q: On the 1/01/x3, J Group acquired 2 025 000 of the 4 500 000 ordinary R1 shares in Entity PA for R5…

A: The objective of the question is to calculate the group's investment in associate figure in its…

Q: Mampuru Limited and its subsidiary reported consolidated net income of R320 000 000 for the year…

A: Consolidated Net income refers to as a income of parent company which exclude any income from its…

Q: bilities of YEAGER Co. were stated at their fair values except for machinery (remaining life 3…

A: Given: To calculate the net income which is present in the year 2021 and the financial statement as,

Q: On January 1, 2022, Pet Company purchased 80% of the shares of Sam Company for P1,000,000. The…

A: Calculation of Non-controlling interest in net asset of subsidiary are as follows.

Q: On January 1, 2018, Parent Company purchased 80% of the outstanding shares of Subsidiary Company for…

A: Non-controlling interest is the amount attributable to the shareholders of the subsidiary company…

Q: How much is the goodwill to be reported on the consolidated balance sheet on January 1, 2019?

A: Consolidated financial statements are the financial statements of a group consisting of multiple…

Q: As of December 31, 2020, the separate company financial statements of Drao co and Its 80% owned…

A: Consolidated retained earnings: The consolidated retained earnings refer to the parent company's…

Q: wned Subsidiary report the following at December 31 of the current year: Parent Net Income,…

A: a) Generally followed principles for distribution of income among depositors are that They share…

Q: On January 1, 2016, Parent Company purchased for P6,500,000 65% of the outstanding shares of…

A: Under merger and acquisition, the purchase consideration is the price which is paid by the parent…

Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

Topic Video

Question

On January 1, 2018, Parent Co. acquired 80% of the ordinary shares of Subsidiary Co. for P1,000,000. At the time of
acquisition, Subsidiary's Ordinary shares, share premium and retained earnings were P100,000, P400,000 and
P500,000 respectively. The identifiable assets and liabilities of the Subsidiary were fairly valued. The assets of the
Subsidiary included goodwill of P50,000.
The following income statement data were prepared by Parent and Subsidiary on December 31, 2019:
Parent Subsidiary
400,000
750,000
50,000
15,000
150,000
300,000
150,000
50,000
Sales
Other income
Cost of goods sold
Operating expenses
During 2019, the Subsidiary declared dividends of P50,000. The dividend received by the parent was recorded as part
of dividend income (included in other income). On January 1, 2019, Parent purchaseda machine from the subsidiary
for P40,000. This was carried at Subsidiary's books at P25,000. The remaining life of the machine was 5 years.
Since the purchase date, Subsidiary Co. bought merchandise from Parent Co. and the selling price of Parent Co. was
125% on cost. Intercompany sales during the year 2018 totaled P150,000. The inventory held by Subsidiary Co.
acquired from Parent was P15,000 on January 1, 2018 and P18,000 on December 31, 2018.
36. What is the consolidated net income attributable to parent to be reported in the consolidated
statement of comprehensive income at December 31, 2019?
A. 469,520
B. 469,400
C. 471,800
D. 511,800
37. What is the non-controlling interest net income to be reported in the consolidated statement of
comprehensive income at December 31, 2019?
A. 40,000
B. 40,600
C. 43,000
D. 42,880

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

1. Parent and its 80% owned Subsidiary report the following at December 31 of the current year: Parent Net Income, P100,000; Parent Dividends, P20,000, Parent Land, P500,000. Subsidiary Net Income, P80,000; Subsidiary Dividends, P10,000; Subsidiary Land, P300,000. On June 1, of the current year, Subsidiary sold land to Parent reporting a gain on sale of P10,000. The gain is included in the net income reported by the Subsidiary. Determine the valuation of Land in the consolidated balance sheet. 2. Parent and its 80% owned Subsidiary report the following at December 31 of the current year: Parent Net Income, P100,000; Parent Dividends, P20,000, Parent Land, P500,000. Subsidiary Net Income, P80,000; Subsidiary Dividends, P10,000; Subsidiary Land, P300,000. On June 1, of the current year, Subsidiary sold land to Parent reporting a gain on sale of P10,000. The gain is included in the net income reported by the Subsidiary. Determine the equity holders of parent’s net income. 3. Parent and…
A Parent corporation purchased 25% of the outstanding common shares of Subsidiary Limited for $2,500,000 on January 1, 2020. The following relates to Subsidiary since the acquisition date: Year Net Income Other Comprehensive Income Dividends Paid 2020 $ 51,800 $11,400 $74,000 2021 148,000 29,600 74,000 Required: Assume that Parent is a private company. Even though it has significant influence, it chose to use the cost method to account for its investment. Prepare ALL the journal entries that Parent should make regarding this investment in Year 2020 and Year 2021
On January 1, 2019, Parent Company acquires 75% (750,000 ordinary shares) of Subsidiary Company for P7,500,000. During this time, the shares of the subsidiary are trading at P8 per share. Moreover, at the date of acquisition, the Subsidiary reports outstanding shares of P4,000,000 and the retained earnings is valued at P2,000,000 and the Subsidiary's inventories is understated by P100,000, equipment with a remaining 5-year life is understated by P600,000 and land is understated by P1,300,000. The Non-controlling interest is valued at P2,375,000 at this date. Parent and Subsidiary furthermore reports net income of P700,000 and P180,000 each respectively and declared dividends of P400,000 and P300,000 each respectively for 2019. What is the Non-controlling interest in net assets arising from the consolidation to be reported at the end of 2019 if the Non-controlling interest is stated at fair value? What is the net income of the Equity Holder's of the Parent to be reported in the…
Company P acquired 90 percent of the common stock of Company S on 1/1/2020. During 2020, Company S reported a net income of $50,000 and dividends of $12,000. Company P uses the simple equity method to account for the investment in S. Which of the following entries is prepared by Company P when consolidating the financial statements for 2020? Debit Subsidiary Income $45,000, Credit Investment in S $45,000 Debit Investment in S $45,000, Credit Subsidiary Income $45,000 Debit Dividends Receivable $10,800, Credit Subsidiary Income $10,800 Debit Subsidiary Income $10,800, Credit Dividends Declared $10,800
On January 1, 2018, Parent Company purchased 80% of the outstanding shares of Subsidiary Company for P800,000. On the date of acquisition, Subsidiary Company reported Ordinary Shares of P800,000 and Retained Earnings of P200,000. Subsidiary's Inventory was understated by P20,000; Equipment with a 5-year life was understated by P20,000, Building with an 8-year life was understated by P80,000 and land was understated by P40,000. The non-controlling interest is to be stated at fair value and the fair value of the non-controlling interest on January 1, 2018 is P210,000. The following are taken from the boaks of Parent and Subsidiary for 2018. Parent Subsidiary Sales 2,000,000 550,000 200,000 1,500,000 Gross Profit 350,000 Net Income 150,000 Dividend Declared (to be paid on Jan 15, 2019) Total Assets 100,000 50,000 5,000,000 4,000,000 From the data above, determine: Assuming the retained earnings of Subsidiary on December 31, 2021 is P350,000, determine the non-controlling interest to be…
On the 1/01/x3, J Group acquired 2 025 000 of the 4 500 000 ordinary R1 shares in Entity PA for R5 695 000. At acquisition, PA had retained earnings of R1 400 000. When preparing the J Group's consolidated financial statements for the year end date of 31/12/x3, accountants at the group entity are working with the following information: In the x3 financial year, Entity PA made a profit after tax of R 1 230 000; In the x3 financial year, PA paid a dividend totaling R45 000 to its shareholders; At the end of the x3 financial year, the group's investment in PA is found to have impaired by R94 000. Based on this information, calculate the group's investment in associate figure, in its consolidated financial statements dated 31/12/x3.
On the 1/01/x3, J Group acquired 2 025 000 of the 4 500 000 ordinary R1 shares in Entity PA for R5 695 000. At acquisition, PA had retained earnings of R1 400 000. When preparing the J Group's consolidated financial statements for the year end date of 31/12/x3, accountants at the group entity are working with the following information: In the x3 financial year, Entity PA made a profit after tax of R 1 230 000; In the x3 financial year, PA paid a dividend totaling R45 000 to its shareholders; At the end of the x3 financial year, the group's investment in PA is found to have impaired by R94 000. Based on this information, calculate the group's investment in associate figure, in its consolidated financial statements dated 31/12/x3.
On January 1, 2020, Parent Company purchased 80% of the common stock of Subsidiary Company for $320,000. · On this date, Subsidiary had common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000, respectively. · Net income and dividends for Subsidiary Company were $50,000 and $10,000, respectively. · Parent Company has used the simple equity method for recording the Subsidiary income and dividends. · On January 1, 2020, the only tangible assets of Subsidiary that were undervalued were inventory and equipment. Inventory was worth $5,000 more than cost. Equipment, which was worth $15,000 more than book value, has a remaining life of 5 years, and straight-line depreciation is used. Any remaining excess is goodwill. The following trial balances of the two companies are prepared on December 31, 2020. a. Prepare the Value Analysis table and the Determination and Distribution of Excess schedule table. b. Prepare all the eliminations…
The PTCL Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each valued at $1.50. The summary statement of the financial position of the subsidiary company immediately following the acquisition is: Fair value of assets acquired $2,640,000 Fair value of liabilities acquired $720,000 Total shareholders’ equity of the subsidiary company $800,000 Retained earnings of the subsidiary company $1,120,000 Required: (a) Pass the necessary journal entry to record the acquisition (b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50.Thanks
Selected information from the separate and consolidated income statements of CHAELISA LTD.and as subsidiary, JENSOO INC. for the year ended December 31, 2021 are as follows: CHAELISA LTD. JENSOOINC. ConsolidatedSales P600,000 P420,000 P924,000COGS 450,000 330,000 693,000Gross profit P150,000 P 90,000 P231,000 During 2021, CHAELISA LTD. sold goods to JENSOO INC. at the same mark-up on cost that CHAELISA LTD. uses for all sales. At December 31, 2021, JENSOO INC. had not paid all of these goods and still held 37.5% of them in inventory. Compute for the original cost of goods in JENSOO INC.’s inventory acquired from Apple.
On January 1, 2016, Parent Company purchased for P6,500,000 65% of the outstanding shares of Subsidiary Company. On this date, the assets of Subsidiary Company have a book value P10,000,000 while their liabilities have book values of P2,000,000. All of Subsidiary Company’s assets approximated their fair values except for Machinery and Land which were understated by P25,000 and P75,000 each respectively and a Liability which was overstated by P10,000. Parent and Subsidiary each have 100,000 shares outstanding and their shares are currently trading in the stock market at P250 and P125 per share to Parent and Subsidiary each, respectively. The non-controlling interest is valued at fair value. What is the the increase in the total assets of Parent because of the acquisition?