subject: financial accounting LSPU SeatworkConsolidation Subsequent to the Date of AcquisitionProblem SolvingOn January 1, 20x1, Joy Co. acquired 60% interest in Axion, Inc. for P300,000. Information onAxion's financial position on this date follows:●●The identifiable assets and liabilities approximated their fair values except forinventories with carrying amount of P120,000 and fair value of P80,000 and building withcarrying amount of P200.000 and fair value of P250.000, The building has remaininguseful life of 5 years,Axion's equity comprises only share capital and retained earnings with carrying amountsof P250.000 and P40.000, respectively.Non-controlling interest is measured using the proportionate share method.All the inventories on January 1, 20x1 were sold during 20x1. No dividends were declared byeither entity during 20x1. There were also no intercompany transactions. There is also noimpairment of goodwill.The individual financial statements of the entities on December 31, 20x1 are shown below:Statements of financial positionAs at December 31, 20x1ASSETSCashInventory...Investment in subsidiary (at cost).Building netTOTAL ASSETSLIABILITIES & EQUITYAccounts payable...Share capital.Retained earnings...Total equity...Total liabilities and equity...SalesCost of goods sold...Gross profitJoy Co.143.000.440.000300.000560.0001,443,000200,0001,000,000243,0001,243,0001,443,000.Statements of profit or lossFor the year ended December 31, 20x1Joy Co.....3007000(165,000)135,000(40.000)(32.000)63,000Axion Co.60,000160,000160,000380,00070,000250,00060,000310,000380,000Axion Co.120 000(72,000)48,000(10,000)(18,000)20,000Depreciation expense....Distribution costs...Profit for the year.Requirement: Prepare the consolidated financial statements as at December 31,20x1.

On 1st Jan, Joy co. acquired 60% shares of Axion Inc. Thus Joy co. is the holding co of Axion Inc.…

Answered: Requirement: Prepare the consolidated…

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Requirement: Prepare the consolidated financial statements as at December 31,20x1.

Cornerstones of Financial Accounting

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ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 30E

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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

subject: financial accounting

LSPU Seatwork
Consolidation Subsequent to the Date of Acquisition
Problem Solving
On January 1, 20x1, Joy Co. acquired 60% interest in Axion, Inc. for P300,000. Information on
Axion's financial position on this date follows:
●
●
The identifiable assets and liabilities approximated their fair values except for
inventories with carrying amount of P120,000 and fair value of P80,000 and building with
carrying amount of P200.000 and fair value of P250.000, The building has remaining
useful life of 5 years,
Axion's equity comprises only share capital and retained earnings with carrying amounts
of P250.000 and P40.000, respectively.
Non-controlling interest is measured using the proportionate share method.
All the inventories on January 1, 20x1 were sold during 20x1. No dividends were declared by
either entity during 20x1. There were also no intercompany transactions. There is also no
impairment of goodwill.
The individual financial statements of the entities on December 31, 20x1 are shown below:
Statements of financial position
As at December 31, 20x1
ASSETS
Cash
Inventory...
Investment in subsidiary (at cost).
Building net
TOTAL ASSETS
LIABILITIES & EQUITY
Accounts payable...
Share capital.
Retained earnings...
Total equity...
Total liabilities and equity...
Sales
Cost of goods sold...
Gross profit
Joy Co.
143.000.
440.000
300.000
560.000
1,443,000
200,000
1,000,000
243,000
1,243,000
1,443,000.
Statements of profit or loss
For the year ended December 31, 20x1
Joy Co.....
3007000
(165,000)
135,000
(40.000)
(32.000)
63,000
Axion Co.
60,000
160,000
160,000
380,000
70,000
250,000
60,000
310,000
380,000
Axion Co.
120 000
(72,000)
48,000
(10,000)
(18,000)
20,000
Depreciation expense....
Distribution costs...
Profit for the year.
Requirement: Prepare the consolidated financial statements as at December 31,20x1.

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