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- 1The following transactions occurred for the period ended regarding LL and its two subsidiaries L1 and L2: On January 1, 2020, LL acquired 60% of the outstanding common stocks of L1. On April 1, 2020, LL acquired 70% of the outstanding common stocks of L2. It is the policy of LL to account all its investment in subsidiary using cost method in its separate financial statements On May 1, 2020, LL sold inventory to L2 at a price of P100,000. On June 1, 2020, L2 resold the inventory coming from LL at a price of P150,000 as follows: 80% to unrelated parties and 20% to L1. On July 1, 2020, L1 sold a new set of inventory to L2 at a price of P200,000. On august 1, 2020, L2 resold the inventory coming from L1 at a price of P300,000 as follows: 40% to unrelated parties and 60% to LL. For the period ended December31, 2020, the affiliates reported the following sales revenue in their separate income statement: o LL – Sales Revenue P3,000,000 o…During 2019, Subsidiary company, Sim had reported a net income $ 41,600 and declared dividends $ 12,000. The current amortization of acquisition price is $ 3,600. Intercompany sales from Subsidiary to Parent company, during 2019 were $ 2,600. Intercompany profit in ending inventory is $ 2,400 and intercompany profit in beginning inventory $ 1,200. Parent Company Pal had acquired 80% of subsidiary, Sim. What is the share of NCI in Subsidiarys net income for the year 2019? Select one: O a. 7,200 O b. 7,300 O c. 7,360 O d. 7,400
- In May 2020, a parent sold inventories to a subsidiary entity for $60 000. The inventories had previously cost the parent entity $48 000. The entire inventory is still held by the subsidiary at reporting date, 30 June 2020. Ignoring tax effects, which of the following is the adjustment entry in the consolidation worksheet at reporting date? a. Cash Dr 48 000 Sales revenue Cr 48 000 Cost of sales Dr 48 000 Inventories Cr 48 000 b. Sales revenue Dr 48 000 Cash Cr 48 000 Inventories Dr 48 000 Cost of sales Cr 48 000 c. Cost of sales Dr 60 000 Sales revenue Cr 12 000 Inventories Cr 48 000 d. Sales revenue Dr 60 000 Cost of sales Cr 48 000 Inventories Cr 12 000 Answer (write…1. P Company acquired 70% interest in S Company in 2019. S reported net income of P80,000 and P90,000 for 2019 and 2020 respectively. During 2019, S sold merchandise to P for P10,000 at a profit of P2,000. The merchandise was later resold by P to outsiders for P15,000 during 2020. For consolidation purposes, what is the non-controlling interest in net income of S for 2020? * Your answerThe parent acquired 75% of the ordinary shares of Sub with acquired control. The summarized statem ent of profit or loss of the two companies for the year ending February 29, 2020, is given below. Sub sold goods to Parent for $8000. It had bought these goods for $6000. 40% of these goods rem ainine3d in Parent's inventory on February 29, 2020. Prepared consolidated statement of profit and loss in a suitable format Parent Sub Sales 87,000 45,000 (19,000) 26,000 (9,800) 16,200 4,536 Cost of Sales (54,000) 33,000 (13,500) 19,500 5,460 Gross Profit Operating Expenses Profit before tax Income tax expense Profit for the year 14,040 11,664
- P company acquired 70% interest in S Company in 2019. S reported net income of 80,000 and 90,000 for 2019 and 2020 respectively. During 2019, S sold merchandise to P for 10,000 at a profit of 2,000. The merchandise was later resold by P to outsiders for 15,000 during 2020. For consolidation purposes, what is the non- controlling interest in net income of S for 2020?Considering the intercompany transactions, compute for the consolidated net income.Parent Company acquired 80% of the ordinary shares of Subsidiary Company at a time when Subsidiary’s book values and fair values were equal. Selected financial data are available for 2022 (see image below).Intercompany sales are as follows (see image below).How much is the Consolidated Net Income? please explain.
- Prepare the worksheet for consolidation purposes and the related eliminating entries on January 1, 2019 and December 31, 2019On January 1, 2021, PCO purchased 70% ownership of SCO which resulted to a gainon acquisition of P100,000. Net assets of SCO were fairly valued except for inventorywhich was understated by P1,500,000. A third of these inventories remained unsoldas of the end of the calendar year.The operations of the two companies for 2021 are as follows:PCO SCOSales P3,100,000 P2,600,000(COGS) (1,300,000) (1,250,000)Gross profit 1,800,000 1,350,000(OPEX) (200,000) (150,000)1,550,0003,550,0001,850,0003,250,000Other income 0 200,000(Other expenses) (120,000) 0Net income P1,480,000 P 400,000In the consolidated statement of comprehensive income for the year endedDecember 31, 2021, how much is the cost of goods sold? A. 1,550,000B. 3,550,000C. 1,850,000D. 3,250,000 based on the information above, In the consolidated statement of comprehensiveincome for the year ended December 31, 2021, how much is the consolidated netincome attributable to the controlling interest? 1,830,0001,980,0001,760,0001,860,000The following are summarized Balance Sheets as on March 31, 2020 H. Ltd. acquired 80% shares in S Ltd. on October 1, 2019 for $ 2,000. At the date of acquisitionall the assets and liabilities of S Ltd were reflected at fair valueThe Retained earnings of S Ltd. on April 1, 2019 was $ 200H Ltd measures the Non Controlling Interest at its proportionate share of the acquiree's netidentifiable assets.S Ltd transferred goods to H Ltd at a transfer price of $ 300. The sales policy of H Ltd is to add50 % of mark up to its cost. Two-thirds remained in inventory at the year end. Required : Calculate goodwill at the date of acquisition and unrealized profit for holding company