Pure Corporation acquired an 80% interest in Sincere Company on January 2, 20x6 for P2, 520,000. On this date, the share capital and retained earnings of the two companies follow: Pure Co Sincere Co Share Capital Retained Earnings 6,000,000 3,000,000 2,250,000 450,000 On January 2, 20x6, the assets and liabilities of Sincere Co were stated at their fair values except for machinery which is P225,000 lower than its fair value (remaining life is 3 years). On September 30, 20x6, Sincere sold merchandise to Pure at an inter-company profit of P150, 000; 25% was still unsold at year- end. Likewise, on October 1, 20x7, Sincere purchased merchandise from Pure for P3, 600,000. The selling affiliate included a 20% mark-up on cost on this date. Only 75% of these purchases had been sold to unrelated parties as of December 31, 20x7. As of December 31, 20x7, goodwill was determined to be impaired by P60, 000. The following is the summary of the 20x7 transactions of the affiliated companies: Pure Co Sincere Co

Pure Corporation acquired an 80% interest in Sincere Company on January 2, 20x6 for P2, 520,000. On this date, the share capital and retained earnings of the two companies follow: Pure Co Sincere Co Share Capital Retained Earnings 6,000,000 3,000,000 2,250,000 450,000 On January 2, 20x6, the assets and liabilities of Sincere Co were stated at their fair values except for machinery which is P225,000 lower than its fair value (remaining life is 3 years). On September 30, 20x6, Sincere sold merchandise to Pure at an inter-company profit of P150, 000; 25% was still unsold at year- end. Likewise, on October 1, 20x7, Sincere purchased merchandise from Pure for P3, 600,000. The selling affiliate included a 20% mark-up on cost on this date. Only 75% of these purchases had been sold to unrelated parties as of December 31, 20x7. As of December 31, 20x7, goodwill was determined to be impaired by P60, 000. The following is the summary of the 20x7 transactions of the affiliated companies: Pure Co Sincere Co

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Pure Corporation acquired an 80% interest in Sincere Company on January 2, 20x6 for P2, 520,000. On
this date, the share capital and retained earnings of the two companies follow:
Pure Co
Sincere Co
Share Capital
Retained Earnings
6,000,000
2,250,000
450,000
3,000,000
On January 2, 20x6, the assets and liabilities of Sincere Co were stated at their fair values except for
machinery which is P225,000 lower than its fair value (remaining life is 3 years). On September 30, 20x6,
Sincere sold merchandise to Pure at an inter-company profit of P150, 000; 25% was still unsold at year-
end. Likewise, on October 1, 20x7, Sincere purchased merchandise from Pure for P3, 600,000. The selling
affiliate included a 20% mark-up on cost on this date. Only 75% of these purchases had been sold to
unrelated parties as of December 31, 20x7. As of December 31, 20x7, goodwill was determined to be
impaired by P60, 000. The following is the summary of the 20x7 transactions of the affiliated companies:
Pure Co
Sincere Co
Net Income
1,500,000
600,000
600,000
Dividends declared
180,000
Determine the following to be presented in the consolidated financial statements for 20x7 if the non-
controlling interest is stated at fair value.
REQUIRED:
1. Net income attributable to parent.
2. Non-controlling interest in net income

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