On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash consideration. The remaining 40 percent of XYZ had an acquisition date fair value of P138,500. On January 1, XYZ possessed equipment (5-year life) that was undervalued on its books P25,000. XYZ also had developed several secret formulas that ABC assessed at P50,000. Theses formulas, although not recorded on XYZ's financial records, were estimated to have a 20-year future life. ABC also determined that the inventory of XYZ is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As an independent case, assume that the goodwill is impaired by P5,000 by December 31, determine the net income/(net loss) attributable to the controlling interest.
On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash consideration. The remaining 40 percent of XYZ had an acquisition date fair value of P138,500. On January 1, XYZ possessed equipment (5-year life) that was undervalued on its books P25,000. XYZ also had developed several secret formulas that ABC assessed at P50,000. Theses formulas, although not recorded on XYZ's financial records, were estimated to have a 20-year future life. ABC also determined that the inventory of XYZ is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As an independent case, assume that the goodwill is impaired by P5,000 by December 31, determine the net income/(net loss) attributable to the controlling interest.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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7. On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash consideration. The remaining 40 percent of XYZ had an acquisition date fair value of P138,500. On January 1, XYZ possessed equipment (5-year life) that was undervalued on its books P25,000. XYZ also had developed several secret formulas that ABC assessed at P50,000. Theses formulas, although not recorded on XYZ's financial records, were estimated to have a 20-year future life. ABC also determined that the inventory of XYZ is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As an independent case, assume that the
As of December 31, the financial statements appeared as follows:
Transcribed Image Text:АВС
XYZ
P (300, 000)
P (200, 000)
Revenues (from sales and
dividends)
Cost of goods sold
Expenses
80, 000
10, 000
P (110, 000)
140, 000
20,000
P (140, 000)
Net Income
Retained eamings 1/1
P (300, 000)
(140, 000)
P (150, 000)
(110, 000)
10,000
P (250, 000)
Net Income
Dividends paid
Retained eamings 12/31
-0-
P (440, 000)
P 210, 000
150, 000
301,500
398,500
Р 1,060, 000
P90, 000
110, 000
Cash and Receivables
Inventory
Investment in SS
-0-
Equipment (net)
Total Assets
300, 000
P500, 000
P (420, 000)
(200, 000)
(440, 000)
P (1,060,000)
P (150, 000)
(100, 000)
(250, 000)
P (500, 000)
Liabilities
Common stock
Retained earmings 12/31
Total Liabilities and Equities
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