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On January 1, 2018, Powell Company acquires 80% of the common stock of Scarlett Company for P372,000. At that time, Scarlett Company's shareholders' equity is composed of common stock (P10 par), P240,000 and retained earnings, P120,000. Also, the fair value

On January 1, 2018, Powell Company acquires 80% of the common stock of Scarlett Company for P372,000. At that time, Scarlett Company's shareholders' equity is composed of common stock (P10 par), P240,000 and retained earnings, P120,000. Also, the fair value

FINANCIAL ACCOUNTING
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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1. Goodwill arising from business combination on January 1, 2018 is
A. 15,840 B. 25,000 C. 84,000 D. 110,200

2. How much of the goodwill is attributable to the parent and non-controlling interest, respectively?
A. 15,840; 9,160 B. 15,840; 0 C. 84,000; 26,200 D. 191,840; 47,960

3. How much is the (1) operating income and (2) net income of the parent for the year ended 2018?
A. (1) 196,800; (2) 196,800
B. (1) 168,000; (2) 168,000
C. (1) 196,800; (2) 168,000
D. (1) 168,000; (2) 196,800

4. How much is the consolidated net income for the year 2018?
A. 203,232 B. 211,000 C. 239,800 D. 256,800

5. How much of the 2018 consolidated net income is attributable to the parent and non-controlling interest, respectively?
A. 202,400; 8,600 B. 168,800; 42,200 C. 203,232; 7,768 D. 191,840; 47,960

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were all sold during 2018 and FIFO inventory costing is used. Goodwill, if any, is impaired by P5,000 during 2018. The investment is to be accounted for using the cost method. Both entities did not issue additional shares during 2018. Trial balances for the legal entities for the year ended 2018 are as follows: Powell Company Debit 232,800 Scarlett Company Credit Debit Credit 90,000 60,000 90.000 48,000 84,000 Cash Accounts receivable, net 90.000 Inventory, 12/31/2018 Land 120,000 210.000 Equipment, net Building, net Investment in Scariett Accounts Payable Bond Payable Common stock, P10 par Retained earnings, 1/1/18 Dividends 105.000 315,000 252.000 372,000 120,000 120,000 240,000 120,000 600,000 240,000 120,000 360,000 72,000 36,000 480,000 240,000 Sales Dividend revenue 28,800 204,000 108,000 138,000 42,000 Cost of goods sold Operating expense 1.828.800 1.828,800 840,000 840,000 The trial balances for the legal entities for the year ended 2019 are as follows: Powell Company Scarlett Company Credit Debit Credit Debit 102,000 96,000 108,000 50,000 48,000 78,000 234,000 Cash Accounts receivable, net 189,000 180,000 Inventory, 12/31/2019 Trading securities Land Equipment, net Building, net 216,000 100,000 210,000 90,000 270,000 372,000 Investment in Scarlett Accounts Payable Bond Payable Common stock, P10 par Retained earnings, 1/1/19 Dividends 140,000 240,000 600,000 200,000 120,000 240,000 144,000 484,800 72,000 48,000 540,000 48,000 360,000 5,000 Sales Dividend revenue Cost of goods sold Operating expense 216,000 137,800 192,000 113,000 2.052.800 2,052.800 1.069.000 1.069.000
Transcribed Image Text:were all sold during 2018 and FIFO inventory costing is used. Goodwill, if any, is impaired by P5,000 during 2018. The investment is to be accounted for using the cost method. Both entities did not issue additional shares during 2018. Trial balances for the legal entities for the year ended 2018 are as follows: Powell Company Debit 232,800 Scarlett Company Credit Debit Credit 90,000 60,000 90.000 48,000 84,000 Cash Accounts receivable, net 90.000 Inventory, 12/31/2018 Land 120,000 210.000 Equipment, net Building, net Investment in Scariett Accounts Payable Bond Payable Common stock, P10 par Retained earnings, 1/1/18 Dividends 105.000 315,000 252.000 372,000 120,000 120,000 240,000 120,000 600,000 240,000 120,000 360,000 72,000 36,000 480,000 240,000 Sales Dividend revenue 28,800 204,000 108,000 138,000 42,000 Cost of goods sold Operating expense 1.828.800 1.828,800 840,000 840,000 The trial balances for the legal entities for the year ended 2019 are as follows: Powell Company Scarlett Company Credit Debit Credit Debit 102,000 96,000 108,000 50,000 48,000 78,000 234,000 Cash Accounts receivable, net 189,000 180,000 Inventory, 12/31/2019 Trading securities Land Equipment, net Building, net 216,000 100,000 210,000 90,000 270,000 372,000 Investment in Scarlett Accounts Payable Bond Payable Common stock, P10 par Retained earnings, 1/1/19 Dividends 140,000 240,000 600,000 200,000 120,000 240,000 144,000 484,800 72,000 48,000 540,000 48,000 360,000 5,000 Sales Dividend revenue Cost of goods sold Operating expense 216,000 137,800 192,000 113,000 2.052.800 2,052.800 1.069.000 1.069.000
On January 1, 2018, Powell Company acquires 80%of the common stock of Scarlett Company for P372,000. At that time, Scarlett Company's shareholders' equity is composed of common stock (P10 par), P240,000 and retained earnings, P120,000. Also, the fair value of the non-controlling interest is P98,200. On the same date, the following assets of Scarlett Company had carrying values that were different from their respective fair values: Inventory Land Equipment, net Building, net Carrying value: 24,000 48,000 84,000 168,000 Fair value: 30,000 55,200 180,000 144,00 Other assets and all liabilities of Scarlett Company had carrying values approximately equal to their respective fair values. On January 1, 2018, the equipment and building had a remaining life of 8 and 4 years, respectively. The inventories of January 1, 2018 were all sold during 2018 and FIFO inventory costing is used. Goodwill, if any, is impaired by P5,000 during 2018. The investment is to be accounted for using the cost method. Both entities did not issue additional shares during 2018. Trial balances for the legal entities for the year ended 2018 are as follows: Powell Company Credit Scarlett Company Debit Debit Credit Cash 232,800 90,000 Accounts receivable, net Inventory, 12/31/2018 Land 90,000 120,000 210,000 105,000 60,000 90,000 48,000 84,000 252,000 Equipment, net Building, net Investment in Scarlett 315,000 372,000 Accounts Payable Bond Payable 120,000 240,000 120,000 120,000 Common stock, P10 par Retained earnings, 1/1/18 600,000 240,000 360,000 120,000 Dividends 72,000 36,000 Sales Dividend revenue 480,000 240,000 28 800
Transcribed Image Text:On January 1, 2018, Powell Company acquires 80%of the common stock of Scarlett Company for P372,000. At that time, Scarlett Company's shareholders' equity is composed of common stock (P10 par), P240,000 and retained earnings, P120,000. Also, the fair value of the non-controlling interest is P98,200. On the same date, the following assets of Scarlett Company had carrying values that were different from their respective fair values: Inventory Land Equipment, net Building, net Carrying value: 24,000 48,000 84,000 168,000 Fair value: 30,000 55,200 180,000 144,00 Other assets and all liabilities of Scarlett Company had carrying values approximately equal to their respective fair values. On January 1, 2018, the equipment and building had a remaining life of 8 and 4 years, respectively. The inventories of January 1, 2018 were all sold during 2018 and FIFO inventory costing is used. Goodwill, if any, is impaired by P5,000 during 2018. The investment is to be accounted for using the cost method. Both entities did not issue additional shares during 2018. Trial balances for the legal entities for the year ended 2018 are as follows: Powell Company Credit Scarlett Company Debit Debit Credit Cash 232,800 90,000 Accounts receivable, net Inventory, 12/31/2018 Land 90,000 120,000 210,000 105,000 60,000 90,000 48,000 84,000 252,000 Equipment, net Building, net Investment in Scarlett 315,000 372,000 Accounts Payable Bond Payable 120,000 240,000 120,000 120,000 Common stock, P10 par Retained earnings, 1/1/18 600,000 240,000 360,000 120,000 Dividends 72,000 36,000 Sales Dividend revenue 480,000 240,000 28 800
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