On January 1, 2021, ABC Co. acquired 80% interest in XYZ, Inc. by 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: 292,000 Total liabilities 120,000 680,000 Share capital Share premium 200,000 (at carrying amounts) 200,000 96,000 296,000 260,000 Share capital Retained 440,000 Retained earnings earnings 176,000 Totel equity 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: TOTAL LIABILITIES 1,672,000 496,000 XYZ, Inc. Carrying Fair value AND EQUITY amounts 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. 1,200,000 (660,000) XYZ, Inc. 200,000 240,000 40,000 Sales 480,000 Equipment Accumulated depreciation Cost of goods sold Gross profit (288,000) (40,000) (48,000) (8,000) 540,000 192,000 Accounts payable (24,000) (24,000) 360,000 Depreciation expense (160,000) (40,000) Net assets 296,000 64,000 (128,000) (72,000) Distribution costs Interest expense Profit 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 also 240,000 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
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Compute for the Consolidated total assets on december 31, 2021
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
