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
Problem 1Q
icon
Related questions
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
Transcribed Image Text: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
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Consolidations
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education