Answered: Requirements: Compute the following: 1.…

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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Question

On January, 2020, P Company acquired 90% of S Company in exchange for 5,400 shares of P10 par common stock having a market value of P120,600. P and S condensed balance sheet where as follows:

Requirements: Compute the following:
1. Partial goodwill on Jan. 1, 2020
2. Non-controlling interest (in net assets) on Jan. 1, 2020
3. Consolidated Retained Earnings, Jan. 1, 2020
4. Equity Holders of Parent - Retained Earnings, Jan. 1, 2020
5. In addition to the information, assuming that on Dec. 31, 2020, the following results were given:

Dividends Paid Net Income
P Company P 15,000 P 30,200
S Company 4,000 9,400

Using cost method to record results of operations, compute the Investment balance on Dec. 31, 2020
6. Dividend income for 2020 using cost method.
7. Non-controlling interest in Net Income on Dec. 31, 2020.
8. Non-controlling interest on Dec. 31, 2020.
9. Profit for the period attributable to Equity Holders of Parent on Dec. 31, 2020.
10. Consolidated/Group Net Income on Dec. 31, 2020.
11. Consolidated Retained Earnings, Dec. 31, 2020.
12. Consolidated Total Equity (Stockholders’ Equity) on Dec. 31, 2020.

Subsidiary
Company
P 37,400
9,100
16,100
40,000
10,000
P 112,600
Assets
Parent
Company
P 30,900
34,200
22,900
179,000
Cash
Accounts receivable, net
Inventories
Equipment, net
Patents
P 267,000
Total Assets
Liabilities and Equities
P 6,600
P 4,000
100,000
100,000
15,000
48.000
P 267,000
Accounts Payable
Bonds Payable
Common stock, P10 par
50,000
Share Premium
15,000
41.000
P 112,600
Retained earnings
Total Liabilities and Equities
At the date of acquisition, all assets and liabilities of Subsidiary Company have book value approximately equal to
their respective market values except the following as determined by appraisal as follows:
Inventories (FIFO method)
Equipment (net-remaining life 4 years)
Patents (remaining life 10 years)
P17,100
48,000
13,000
ADDITIONAL INFORMATION:
For the year ended December 31, the following results were given:
Parent Company
Subsidiary Company
Dividend Paid
P15,000
4,000
Net Income
P30,200
9,400

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