Answered: On January 1, 20x8,Parent Company… | bartleby

On January 1, 20x8,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, 20x8 is P210,000. The following are taken from the books of Parent and Subsidiary for 20x8. 1. Determine the Non-Controlling Interest as of December 31, 20x8.

FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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On January 1, 20x8,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, 20x8 is P210,000. The following are taken from the books of Parent and Subsidiary for 20x8.

1. Determine the Non-Controlling Interest as of December 31, 20x8.

2.

Subsidiary
2,000,000 1,500,000
350,000
150,000
50,000
Parent
Sales
Gross Profit
550,000
200,000
100,000
Net Income
Dividend Declared (to be paid on
Jan
15, 20x9)
Total As sets
5,000,000 4,000,000

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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…
Parent Corporation acquired an 80% interest in Sub Corporation for $380,000 on January 1, 20X4 when Sub's stockholders' equity consisted of $200,000 capital stock and $75,000 retained earnings. The excess cost over book value acquired was allocated to inventory that was overvalued by $50,000 and sold in 20X4, to equipment that was undervalued by $100,000 and to goodwill. The undervalued equipment had an 8-year remaining useful life. Parent regularly sells inventory to Sub at 125% of cost. Intercompany sales were $200,000 in 20X5 and $100,000 in 20X6. Sub's inventory included $35,000 of this merchandise at 12/31/20X5 and $20,000 of this merchandise at 12/31/20X6. On October 1, 20X4 Sub sold Parent a building for $110,000. Sub had originally paid $150,000 for the building and had accumulated depreciation as of the date of sale of $90,000. Parent is depreciating the building at a rate of $22,000 per 12-month period. During 20X4 Sub sold land for which it had paid $50,000 to Parent…

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