On January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 par common stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1, were as follows: Using the proportionate basis or partial goodwill method, compute the following: 1. The amount of goodwill on January 1: A. P 2,600 C. P 14,400 B. P 3,800 D. P 25,200 2. The equity holders of parent (or controlling interest) retained earnings on January 1: A. P 48,000 C. P 84,900 B. P52,100 D. P 89,000 3. The consolidated retained earnings on January 1: A. P 48,000 C. P 84,900 B. P52,100 D. P 89,000

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On January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 par
common stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1,
were as follows:

Using the proportionate basis or partial goodwill method, compute the following:
1. The amount of goodwill on January 1:
A. P 2,600 C. P 14,400
B. P 3,800 D. P 25,200
2. The equity holders of parent (or controlling interest) retained earnings on January 1:
A. P 48,000 C. P 84,900
B. P52,100 D. P 89,000
3. The consolidated retained earnings on January 1:
A. P 48,000 C. P 84,900
B. P52,100 D. P 89,000

 

Subsidiary
Company
P 37,400
9,100
16,100
40,000
10,000
P 112,600
Assets
Parent
Company
P 30,900
34,200
22,900
179,000
Cash
Accounts receivable, net
Inventories
Equipment, net
Patents
P 267,000
Total Assets
Liabilities and Equities
Accounts Payable
Bonds Payable
Common stock, P10 par
Share Premium
Retained earnings
Total Liabilities and Equities
P 6,600
P 4,000
100,000
100,000
15,000
48.000
P 267,000
50,000
15,000
41.000
P 112,600
At the date of acquisition, all assets and liabilities of Subsidiary Company have book value approximately equal to
their respective market values except the following as determined by appraisal as follows:
P 17,100
Inventories (FIFO method)
Equipment (net-remaining life 4 years)
Patents (remaining life 10 years)
48,000
13,000
ADDITIONAL INFORMATION:
For the year ended December 31, the following results were given:
Parent Company
Subsidiary Company
Dividend Paid
P15,000
4,000
Net Income
P30,200
9,400
Transcribed Image Text:Subsidiary Company P 37,400 9,100 16,100 40,000 10,000 P 112,600 Assets Parent Company P 30,900 34,200 22,900 179,000 Cash Accounts receivable, net Inventories Equipment, net Patents P 267,000 Total Assets Liabilities and Equities Accounts Payable Bonds Payable Common stock, P10 par Share Premium Retained earnings Total Liabilities and Equities P 6,600 P 4,000 100,000 100,000 15,000 48.000 P 267,000 50,000 15,000 41.000 P 112,600 At the date of acquisition, all assets and liabilities of Subsidiary Company have book value approximately equal to their respective market values except the following as determined by appraisal as follows: P 17,100 Inventories (FIFO method) Equipment (net-remaining life 4 years) Patents (remaining life 10 years) 48,000 13,000 ADDITIONAL INFORMATION: For the year ended December 31, the following results were given: Parent Company Subsidiary Company Dividend Paid P15,000 4,000 Net Income P30,200 9,400
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