Problem 4: Pepper Company acquired 80% of the voting stock of Salt Company on January 1, 2016, when Salt Company's retained earnings amounted to P150,000. The difference between the implied and book value on the date of acquisition was allocated as follows: Land P50,000 Equipment (10-year) Goodwill 20,000 40,000 Salt Company reported retained earnings of P260,000 on January 1, 2019, and P320,000 on December 31, 2019. Salt Company reported net income of P90,000 and declared dividends of P30,000 in 2019. Also, pepper reported net income using cost method in 2019 in the amount of P724,000 with a dividends paid of P25,000 and retained earnings on December 31, 2019 of P3,500,000. The sales, cost of sales and intercompany sales made during 2019 are as follows: Pepper Co P2,500,000 Particulars Salt Co Sales P1,200,000 Cost of sales 1,250,000 875,000 Intercompany sales Pepper to Salt Salt to Pepper There were no intercompany sales prior to 2018 and unrealized profits on January 1 and on December 31, 2019, resulting from intercompany sales are as summarized below: 320,000 290,000 Particulars Unrealized Intercompany profit on 1/1/19 12/31/19 Resulting from Sales by Salt to Pepper P10,000 15000 P5,000 Sales hy Penner to Salt 20.000

Problem 4: Pepper Company acquired 80% of the voting stock of Salt Company on January 1, 2016, when Salt Company's retained earnings amounted to P150,000. The difference between the implied and book value on the date of acquisition was allocated as follows: Land P50,000 Equipment (10-year) Goodwill 20,000 40,000 Salt Company reported retained earnings of P260,000 on January 1, 2019, and P320,000 on December 31, 2019. Salt Company reported net income of P90,000 and declared dividends of P30,000 in 2019. Also, pepper reported net income using cost method in 2019 in the amount of P724,000 with a dividends paid of P25,000 and retained earnings on December 31, 2019 of P3,500,000. The sales, cost of sales and intercompany sales made during 2019 are as follows: Pepper Co P2,500,000 Particulars Salt Co Sales P1,200,000 Cost of sales 1,250,000 875,000 Intercompany sales Pepper to Salt Salt to Pepper There were no intercompany sales prior to 2018 and unrealized profits on January 1 and on December 31, 2019, resulting from intercompany sales are as summarized below: 320,000 290,000 Particulars Unrealized Intercompany profit on 1/1/19 12/31/19 Resulting from Sales by Salt to Pepper P10,000 15000 P5,000 Sales hy Penner to Salt 20.000

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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