What is the amount of pre-acquisition earnings on the acquisition date consolidated income statement if the parent acquires 90 percent of the subsidiary’s stock and the following income statement accounts exist at the acquisition date?
- What is the amount of pre-acquisition earnings on the acquisition date consolidated income statement if the parent acquires 90 percent of the subsidiary’s stock and the following income statement accounts exist at the acquisition date?
Parent Subsidiary
Sales P250,000 P60,000
Cost of Goods Sold 120,000 12,000
Operating Expenses 40,000 8,000
Income Tax Expense 32,000 14,000
2. Using the same information in No. 1, what is the imputed value of a subsidiary if the parent pays P56,000 for 80 percent of the subsidiary’s stock?
Use the following information for question 3 and 4:
Marksman acquired 100 percent of Tribal Transit for P275,000. At the date of acquisition, Fast Transit had the following book and market values:
Book Value Market Value
Cash and Receivables P30,000 P30,000
Inventory 100,000 120,000
Plant Assets (net) 210,000 300,000
Current Liabilities (45,000) (45,000)
Long-term Debt (115,000) (115,000)
Common Stock (10,000)
4. What is the amount of the “Investment in Tribal Transit” account on Marksman’s financial records at the acquisition date?
5. What amount of pre-acquisition earnings is eliminated in the acquisition date worksheet elimination?
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