Required: Prepare the journal entries that both companies should make for the year b. Allocate the consolidated comprehensive income at the end of the year.
Required: Prepare the journal entries that both companies should make for the year b. Allocate the consolidated comprehensive income at the end of the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:1. On January 1, 20X1, P Company (PC) purchased 80% of the outstanding shares of S Company (SC) at the
cost of P700,000. On that date, SC had P300,000 and P500,000 capital stock and retained earnings,
respectively. The non-controlling interest (NCI) is measured on a fair-value basis.
For 20X1, PC had a comprehensive income (CI) of P300,000 and paid dividends of P100,000. On the other
hand, SC reported a Cl of P150,000 and paid dividends of P50,000. All of the assets and liabilities of S
Company had book values that approximately equal to their respective market values.
On December 31, 20X1, PC sold a piece of equipment with a book value of P30,000 to SC for P25,000.
The gain on the sale is included in the Cl of PC indicated above. The equipment has a 10-year useful life.
It has been used for the past five (5) years before the date of acquisition.
Required:
a. Prepare the journal entries that both companies should make for the year 20X1.
b. Allocate the consolidated comprehensive income at the end of the year.
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