On January 1, 2021, ABC Co. acquired 80% interest in XYZ, Inc. by 292,000 issuing 5,000 shares with fair value of P60 per share and par value of P40 per share. XYZ's shareholders' equity as of January 1, 2021 comprises the following: Total liabilities 120,000 680,000 Share capital Share premium 200,000 (at carrying amounts) 260,000 Share capital Retained earnings Total equity 200,000 Retained 440,000 96,000 296,000 _ earnings 176,000 1,380,000 Total equity 376,000 On January 1, 2021, the fair values of the assets and liabilities of XYZ, Inc. were determined by appraisal, as follows: XYZ, Inc. TOTAL LIABILITIES 1,672,000 496,000 Fair value Carrying amounts AND EQUITY Fair values increment Cash 20,000 20,000 Statements of profit or loss For the year ended December 31, 2021 Accounts receivable 48,000 48,000 Inventory 92,000 124,000 32,000 ABC Co. XYZ, Inc. 200,000 240,000 40,000 Sales 1,200,000 480,000 Equipment Accumulated Cost of goods sold Gross profit (660,000) 540,000 (288,000) (40,000) (48,000) (8,000) depreciation Accounts payable Net assets 192,000 (24,000) 296,000 (24,000) Depreciation expense (160,000) (40,000) 360,000 64,000 (128,000) (12,000) 240,000 Distribution costs (72,000) Interest expense The remaining useful life of the equipment is 4 years. During 2021, no dividends were declared by either ABC or XYZ. There were also Profit for the year 80,000 no inter-company transactions. The group determined that goodwill is impaired by P4,000. ABC's and XYZ's individual On acquisition date, ABC Co. elected to measure non-controlling interest as its proportionate share in XYZ, Inc.'s net identifiable financial statements at year-end are shown below: Statements of financial position As at December 31, 2021 ABC Co. assets. XYZ, Inc. ASSETS Cash 92,000 228,000 Accounts 300,000 88,000 receivable Inventory 420,000 60,000 Investment in 300,000 subsidiary Equipment 800,000 200,000 Accumulated (240,000) (80,000) depreciation TOTAL ASSETS 1,672,000 496,000