On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U' beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year. Determine the consolidated net income for 2020.
On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U' beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year. Determine the consolidated net income for 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 2, 2019, U Co. purchased 75% of the
outstanding shares of N Co. resulting to a goodwill of
P60,000. On that date, the non-cash assets of N Co.
whose book values did not equal their book values
were accounts receivable which was overstated by
P4,500 and equipment with a remaining 5 year life on
the purchase date which was understated by
P50,000. For the year 2010, U and N reported net
income of P350,000 and P200,000 each respectively.
U' beginning inventory included merchandise
purchased from N Company amounting to P39,000
which was sold to them by N at a 30% markup, 80% of
these goods were sold during the year. N, on the other
hand, included inventory items which they purchased
from U Co. amounting to 18,000. These goods were
sold by U at a 25% markup. 90% of these goods were
sold by N for the year. Determine the consolidated net
income for 2020.
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