Answered: Parent Company purchased 60% of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Parent Company purchased 60% of Subsidiary company on January 2, 2022 for P3,930,000 when Subsidiary’s book value was P6,300,000.   On that day, the market value of the net assets of Subsidiary equaled their book values with the following exceptions:
                                    Book Value      Market Value   Remaining Life
Buildings                     P1,850,000       P1,600,000 20 years
Equipment                   300,000             500,000         10 years

Subsidiary Company reported the following for 2022 and 2023:
                        Net income (loss)         Dividends
2022                P750,000                     P100,000
2023                150,000                       50,000

1. How much is the net income attributable to non-controlling interest in 2023?

2. Using the fair value method, how much is the non-controlling interest as at December 31, 2023?

Definition Definition Financial journal in which only cash-related transactions are recorded. Cash transactions are posted chronologically in the cash book, which is also called a subsidiary book. All the cash receipts are recorded on the debit side and all the cash payments are recorded on the credit side. An important point to remember is that the cash book never shows a credit balance; only a debit balance is shown in the cash book.

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