Pure Corporation acquired an 80% interest in Sincere Company on January 2, 20x6 for P2,520,000. On thisdate, the share capital and retained earnings of the two companies follow:Pure CoSincere CoShare Capital6,000,0002,250,000Retained Earnings3,000,000450,000On January 2, 20x6, the assets and liabilities of Sincere Co were stated at their fair values except for machinerywhich is P225,000 lower than its fair value (remaining life is 3 years). On September 30, 20x6, Sincere soldmerchandise to Pure at an inter-company profit of P150,000; 25% was still unsold at year-end. Likewise, onOctober 1, 20x7, Sincere purchased merchandise from Pure for P3,600,000. The selling affiliate included a20% mark-up on cost on this date. Only 75% of these purchases had been sold to unrelated parties as ofDecember 31, 20x7. As of December 31, 20x7, goodwill was determined to be impaired by P60,000. Thefollowing is the summary of the 20x7 transactions of the affiliated companies:Pure CoSincere CoNet Income1,500,000600,000Dividends declared600,000180,000Determine the following to be presented in the consolidated financial statements for 20x7 if the non-controlling interest is stated at fair value.Non-controlling interest in net income.

Given: To calculate the net income and the non controlling interest with the given values as,

Retained Earnings 3,000,000 450,000 e assets and liabilities of Sincere Co were stated at their fair values ex er than its fair value (remaining life is 3 years). On September 30, at an inter-company profit of P150,000; 25% was still unsold at year- ere purchased merchandise from Pure for P3,600,000. The selling on this date. Only 75% of these purchases had been sold to unre As of December 31, 20x7, goodwill was determined to be impaired ry of the 20x7 transactions of the affiliated companies:

Retained Earnings 3,000,000 450,000 e assets and liabilities of Sincere Co were stated at their fair values ex er than its fair value (remaining life is 3 years). On September 30, at an inter-company profit of P150,000; 25% was still unsold at year- ere purchased merchandise from Pure for P3,600,000. The selling on this date. Only 75% of these purchases had been sold to unre As of December 31, 20x7, goodwill was determined to be impaired ry of the 20x7 transactions of the affiliated companies:

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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