Several years ago, Quarantine Company purchased 80% interest of Lockdown Company for an amount equal to the fair value of Lockdown’s net assets. On March 9, 2022, Quarantine sold inventory to Lockdown for P150,000 of which P50,000 was unsold as of December 31, 2022. The beginning inventory of Lockdown includes P30,000 worth of merchandise purchased from Quarantine. For the year ended December 31, 2022, Quarantine reported profit of P200,000 and paid dividends of P60,000. Lockdown has a net income and dividends paid of P90,000, and P45,000, respectively for 2022. Quarantine sells merchandise at a profit rate of 25% based on cost, while Lockdown has a profit rate of 30% based on cost. Compute the consolidated net income.
Several years ago, Quarantine Company purchased 80% interest of Lockdown Company for an amount equal to the fair value of Lockdown’s net assets. On March 9, 2022, Quarantine sold inventory to Lockdown for P150,000 of which P50,000 was unsold as of December 31, 2022. The beginning inventory of Lockdown includes P30,000 worth of merchandise purchased from Quarantine. For the year ended December 31, 2022, Quarantine reported profit of P200,000 and paid dividends of P60,000. Lockdown has a net income and dividends paid of P90,000, and P45,000, respectively for 2022. Quarantine sells merchandise at a profit rate of 25% based on cost, while Lockdown has a profit rate of 30% based on cost. Compute the consolidated net income.
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