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Problem I
1.
(Full or partial-goodwill) the same answer.
Consideration transferred by MM .................... P664,000
Noncontrolling interest fair value..................... 166,000*
Fair value of Subsidiary
P830,000
Less: Book value of SHE S...
(600,000)
Positive excess ...............................................
230,000
Annual Excess
Life
Amortizations
Excess fair value assigned to buildings
80,000 20 years
P4,000
Goodwill - full
P150,000 indefinite
-0Total...........................................................
P4,000
2.
3.
Full-goodwill
Common Stock - TT ....................................................
Additional Paid-in Capital - TT .....................................
Retained Earnings - TT.................................................
Investment in TT Company (80%) .........................
Non-controlling interest (20%) ..............................
Buildings .....................................................................
Goodwill ......................................................................
Investment in TT Company (80%) .........................
Non-controlling interest (P166,000 P120,000)....
Partial-goodwill
Common Stock - TT ....................................................
Additional Paid-in Capital - TT .....................................
Retained Earnings - TT.................................................
Investment in TT Company (80%) .........................
Non-controlling interest (20%) ..............................
Buildings .....................................................................
Goodwill ......................................................................
Investment in TT Company (80%) .........................
Non-controlling interest (20% x P80,000) .............
4.
5.
300,000
90,000
210,000
80,000
150,000
480,000
120,000
184,000
46,000
300,000
90,000
210,000
480,000
120,000
80,000
120,000
184,000
16,000
P
P664,000
6.
Using the acquisition method, the allocation will be the total difference (P80,000)
between the buildings' book value and fair value. Based on a 20 year life, annual excess
amortization is P4,000.
MM book valuebuildings ..........................................
P
800,000
TT book valuebuildings ............................................
300,000
Allocation ...................................................................
80,000
Excess Amortizations for 20x420x5 (P4,000 2) .
(
8,000)
Consolidated buildings account
P 1,172,000
7.
150,000
P
120,000
8. The common stock and additional paid-in capital figures to be reported are the parent
balances only.
Common stock, P500,000
Additional paid-in capital, P280,000
Problem II
1.
Partial Goodwill or Proportionate Basis
a.
Investment in S
225,000
Beginning Retained Earnings-Palm Inc.
225,000
To establish reciprocity/convert to equity (0.90 x(P1,250,000 P1,000,000))
b.
c.
Common stock S
Retained earnings S
Investment in S Co
NCI (P4,250,000 x 10%)
Land
Investment in S
NCI [(P500,000 x 10%) (P100,000 x 10%)]
Retained earnings P (bargain purchase gain
closed to retained earnings since only balance
sheets are being examined, P300,000 P90,000
depreciation, 20x4)
3,000,000
1,250.000
3,825,000
425,000
400,000
FV of SHE of S:
Common stock, 1/1/20x5
P3,000,000
Retained earnings, 1/1/20x5
Retained earnings, 1/1/20x4
P1,000,000
NI Subsidiary (20x4)
250,000
Dividends Subsidiary 20x4
(
0) 1,250,000
Book value of SHE S, 1/1/20x5
P4,250,000
Adjustments to reflect fair value
500,000
Amortization of allocated excess (P100,000 x 1)
( 100,000)
FV of SHE of S
P4,650,000
Multiplied by: NCI%
10%
FV of NCI
P 465,000
150,000
40,000
210,000
Computation of Gain:
Partial Goodwill or Proportionate Basis
Fair value of Subsidiary:
Consideration transferred
P3,750,00
0
_3,600,00
0
P
150,000
P 90,000
360,000
__450,000
(P300,000
)
c.
Common stock S
Retained earnings S
Investment in S
NCI (P4,250,000 x 10%)
Land
Investment in S
NCI [(P500,000 x 10%) (P100,000 x 10%)]
Retained earnings P (bargain purchase gain
closed to retained earnings since only balance
sheets are being examined, P300,000 P90,000
depreciation, 20x4)
3,000,000
1,250.000
3,825,000
425,000
400,000
150,000
40,000
FV of SHE of S:
Common stock, 1/1/20x5
P3,000,000
Retained earnings, 1/1/20x5
Retained earnings, 1/1/20x4
P1,000,000
NI Subsidiary (20x4)
250,000
Dividends Subsidiary 20x4
(
0) 1,250,000
Book value of SHE S, 1/1/20x5
P4,250,000
Adjustments to reflect fair value
500,000
Amortization of allocated excess (P100,000 x 1)
( 100,000)
FV of SHE of S
P4,650,000
Multiplied by: NCI%
10%
FV of NCI
P 465,000
210,000
P4,166,66
7
4,000,000
P
166,667
2.
P 100,000
400,000
__500,000
(P333,333
Note: In case of gain, the working paper eliminating entries under partial and fullgoodwill approach are the same.
Consolidated Retained Earnings, December 31, 20x5
Retained earnings - Parent Company, December 31, 20x5 (cost model
Adjustment to convert from cost model to equity method for purposes of
consolidation or to establish reciprocity:/Parents share in adjusted
net
increased in subsidiarys retained earnings:
Retained earnings Subsidiary, December 31, 20x5
(P1,000,000 + P250,000 P0 + P300,000 P0)
Less: Retained earnings Subsidiary, January 1, 20x4
Increase in retained earnings since date of acquisition
Less: Amortization of allocated excess 20x4 (inventory)
Multiplied by: Controlling interests %...................
Add: Bargain purchase gain (Controlling interest P300,000)
Less: Goodwill impairment loss
Consolidated Retained earnings, December 31, 20x5
Problem III
Computation of Goodwill:
Partial Goodwill
Fair value of Subsidiary:
Consideration transferred
Less: BV of SHE of S (P1,000,000 + P500,000) x 80%
Allocated excess
Less: Over/under valuation of A and L: Inc. (Dec.)
Prop., plant and eqpt. (P1,500,000 P600,000) x
80%
Goodwill partial
Full-goodwill:
Fair value of Subsidiary:
Consideration transferred P2,800,000 / 80%
Less: BV of SHE of S (P1,500,000 x 100%)
Allocated excess
Less: Over/under valuation of A and L: Inc. (Dec.)
Prop., plant and eqpt. (P1,500,000 P600,000) x
80%
Goodwill full
Amortization of allocated excess:
P900,000 / 10 years = P90,000 per year
P2,000,000
P1,550,000
1,000,00
0
P 550,000
100,000
P 450,000
90%
P405,000
300,000
_______0
__705,,000
P2,705,000
P2,800,00
0
_1,200,00
0
P1,600,00
0
__720,000
P
880,000
P3,500,0
00
1,500,00
0
P2,000,0
00
__900,00
0
P1,100,00
0
1.
Cost Model-Full Goodwill (Eliminating Entries)
20x4
a. Beginning Retained Earnings-S Co.
Capital Stock- S Co.
Property and Equipment (net)
Goodwill
Investment in S Co.
Non-controlling Interest
b. Depreciation Expense
Property and Equipment (net)
1,000,000
500,000
900,000
1,100,000
2,800,000
700,000
P 500,000
1,000,000
P1,500,000
900,000
P2,400,000
20%
P 480,000
220,000
P 700,000
90,000
90,000
20x5
a. Investment in S Company (P300,000 x 0.80)
240,000
Beginning Retained Earnings-P Co.
To establish reciprocity/convert to equity as of 1/1/20x5
b. Beginning Retained Earnings-S Company
1,300,000
Capital Stock-S Company
500,000
Property and Equipment (net)
900,000
Goodwill
1,100,000
Investment in S Company (P2,800,000 + P240,000)
Non-controlling Interest P700,000 +
[(P1,300,000 P1,000,000) x 0.20]
240,000
3,040,000
760,000
FV of SHE of S:
Common stock, 1/1/20x5
P 500,000
Retained earnings, 1/1/20x5
Retained earnings, 1/1/20x4
P1,000,000
NI Subsidiary (20x4)
300,000
Dividends Subsidiary 20x4
(
0) 1,300,000
Book value of SHE S, 1/1/20x5
P1,800,000
Adjustments to reflect fair value
900,000
FV of SHE of S1/1/x5
P2,700,000
Multiplied by: NCI%
20%
FV of NCI (partial)
P 540,000
Add: NCI on full-goodwill (P1,100,000 P880,000)
220,000
FV of NCI (full)
P 760,000
72,000
18,000
90,000
180,000
NI Subsidiary (20x4)
300,000
Dividends Subsidiary 20x4
(
0) 1,300,000
Book value of SHE S, 1/1/20x5
P1,800,000
Adjustments to reflect fair value
900,000
Amortization of allocated excess (P90,000 x 1)
(
90,000)
FV of SHE of S
P2,610,000
Multiplied by: NCI%
20%
FV of NCI (partial)
P 522,000
Add: NCI on full-goodwill (P1,100,000 P880,000)
220,000
FV of NCI (full)
P 742,000
1,000,000
500,000
900,000
880,000
b. Depreciation Expense
Property and Equipment (net)
2,800,000
480,000
90,000
20x5
a. Investment in S Company (P300,000 x 0.80)
240,000
Beginning Retained Earnings-P Co.
To establish reciprocity/convert to equity as of 1/1/20x5
90,000
240,000
P 500,000
P1,000,000
300,000
(
0) 1,300,000
P1,800,000
900,000
P2,700,000
20%
P 540,000
72,000
18,000
90,000
180,000
P400,000
300,000
P700,000
P 42,000
90,000
____0
132,00
0
P568,000
42,000
P610,000
P 300,000
( 90,000)
P210,000
20
%
P 42,000
20x5
Consolidated Net Income for 20x5
Net income from own/separate operations
P Company
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess
Goodwill impairment
Controlling Interest in Consolidated Net Income or Profit
attributable to equity holders of parent..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20x4
P425,000
400,000
P825,000
P 62,000
90,000
____0
152,00
0
P673,000
62,000
P735,000
P 400,000
( 90,000)
P310,000
20
%
P 62,000
Problem IV
1. Common stock of TT Company
on December 31, 20x4
Retained earnings of TT Company
January 1, 20x4
Sales for 20x4
Less: Expenses
Dividends paid
Retained earnings of TT Company
on December 31, 20x4
Net book value on December 31, 20x4
Proportion of stock acquired by QQ
Purchase price
2. Net book value on December 31, 20x4
Proportion of stock held by
noncontrolling interest
Balance assigned to noncontrolling interest
P 90,000
P 130,000
195,000
(160,000)
(15,000)
150,000
P240,000
x
.80
P192,000
P240,000
x
.20
P 48,000
3. Consolidated net income is P143,000. None of the 20x4 net income of TT Company was
earned after the date of purchase and, therefore, none can be included in consolidated
net income.
4. Consolidate net income would be P178,000 [P143,000 + (P195,000 - P160,000)].
Problem V
Requirements 1 to 4:
Date of Acquisition January 1, 20x4
Fair value of Subsidiary (100%)
Consideration transferred:
Cash
Notes payable
Less: Book value of stockholders equity of S:
Common stock (P240,000 x 100%)
.
Retained earnings (P120,000 x 100%)...
Allocated excess (excess of cost over book value)
..
Less: Over/under valuation of assets and liabilities:
Increase in inventory (P6,000 x 100%)
P 360,000
105,000
P 465,000
P 240,000
120,000
360,000
P 105,000
6,000
7,200
96,000
( 24,000)
4,800
90,000
P 15,000
S Co.
Fair value
P 24,000
48,000
84,000
168,000
(120,000)
P 204,000
(Over) Under
Valuation
30,000
55,200
180,000
144,000
( 115,200)
P 294,000
6,000
7,200
96,000
(24,000)
4,800
P 90,000
The buildings and equipment will be further analyzed for consolidation purposes as follows:
Equipment ..................
Less: Accumulated
depreciation..
Net book
value...
Buildings................
Less: Accumulated
depreciation..
Net book
value...
S Co.
Book value
180,000
S Co.
Fair value
180,000
Increase
(Decrease)
0
96,000
( 96,000)
84,000
180,000
96,000
S Co.
Book value
360,000
S Co.
Fair value
144,000
(Decrease)
( 216,000)
192,000
( 192,000)
168,000
144,000
24,000)
Adjustments
to
Inventory
Subject to Annual Amortization
Equipment (net).........
Buildings (net)
Bonds payable
be
Over/
under
P
6,000
Lif
e
Current
Year(20x4)
Annual
Amount
P
6,000
P 6,000
P
-
96,000
(24,00
0)
4,80
0
12,000
12,000
12,000
( 6,000)
1,20
0
P
13,200
( 6,000)
1,200
(6,000)
1,20
0
P 13,200
P 7,200
20x5
January 1, 20x4:
(1) Investment in S Company
Cash.
.
Notes payable
465,000
360,000
105,000
Acquisition of S Company.
36,000
36,000
On the books of S Company, the P36,000 dividend paid was recorded as follows:
Dividends paid
Cash.
36,000
36,000
240,000
120,000
360,000
(E2)
Inventory.
Accumulated depreciation equipment..
Accumulated depreciation buildings..
Land
.
Discount
on
bonds
payable.
Goodwill.
Buildings..
Investment in S Co.
6,000
96,000
192,000
7,200
4,800
15,000
216,000
105,000
6,000
6,000
6,000
1,200
3,600
6,000
12,000
1,200
3,600
Cost of
Goods
Sold
Inventory sold
Equipment
Buildings
Bonds payable
Totals
Depreciation/
Amortization
Expense
Amortizatio
n
-Interest
P
6,000
P12,000
( 6,000)
_______
P 6,000
_______
P 6,000
P 1,200
P1,200
36,000
36,000
Sales
Income Statement
P Co
P480,000
S Co.
P240,000
Dividend income
Total Revenue
36,000
P516,000
P240,000
P204,000
P138,000
60,000
24,000
48,000
18,000
Dr.
(4)
36,000
(3)
6,000
(3)
6,000
(3)
1,200
(3)
3,600
Cr.
Consolidated
P 720,000
_________
P 720,000
P 348,000
90,000
1,200
3,600
66,000
P312,000
P204,000
P360,000
S Company
Net income, from above
Total
Dividends paid
P Company
S Company
Retained earnings, 12/31 to Balance
Sheet
204,000
P564,000
P180,000
P 60,000
P508,800
P211,200
P 360,000
P120,000
60,000
P180,000
(1)
120,000
211,200
P571,200
72,000
72,000
36,000
P492,000
P144,000
Cash.
Accounts receivable..
P
147,000
90,000
P 90,000
60,000
Inventory.
120,000
90,000
Land.
Equipment
Buildings
210,000
240,000
720,000
48,000
180,000
540,000
(4)
36,000
________
P 499,200
Balance Sheet
Total
Accumulated depreciation
equipment
Accumulated depreciation
buildings
Accounts payable
Bonds payable
Common stock, P10 par
Common stock, P10 par
Retained earnings, from above
Total
(2)
6,000
(2)
7,200
465,000
P1,992,000
P1,008,0
00
P 135,000
P 96,000
405,000
120,000
240,000
600,000
___590,400
P1,992,00
0
(3)
6,000
(3)
265,200
420,000
1,044,000
1,200
3,600
(3)
3,600
(1) 360,000
(2) 105,00
0
11,400
P2,341,200
(2)
(3)
96,000
12,000
(2)
192,000
288,000 (3)
6,000
120,000
120,000
240,000
144,000
P1,008,0
00
237,000
150,000
210,000
(2) 216,000
(2)
4,800
(2)
15,000
P 147,000
495,000
240,000
360,000
600,000
(1)
240,000
499,200
P
736,200
P
736,200
P2,341,200
Only a single entry is recorded by the parent in 20x5 in relation to its subsidiary investment:
48,000
48,000
On the books of S Company, the P40,000 dividend paid was recorded as follows:
Dividends paid
Cash
48,000
48,000
24,000
24,000
year, 1/1/20x5.
P144,000
120,000
P 24,000
100%
P 24,000
240,000
144,000
384,000
(E3)
Inventory.
Accumulated depreciation equipment..
Accumulated depreciation buildings..
Land
.
Discount
on
bonds
payable.
Goodwill.
Buildings..
Investment in S Co.
20x5.
6,000
96,000
192,000
7,200
4,800
15,000
216,000
105,000
16,800
6,000
12,000
1,200
6,000
24,000
2,400
3,600
Inventory sold
Equipment
Buildings
Bonds payable
Impairment loss
Totals
(20x4)
Retaine
d
earnings
,
P
6,000
12,000
(6,000)
1,200
3,60
0
P
16,800
Depreciation/
Amortization
expense
Amortizatio
n
-Interest
12,000
( 6,000)
P 1,200
P 6,000
P1,200
48,000
48,000
(E6)
Non-controlling
interest
in
Subsidiary
Non-controlling interest ..
Net
Income
of
16,560
16,560
P 90,000
(
7,200)
P 82,000
Multiplied by:
%..........
Non-controlling
(NCINI)
Non-controlling
interest
20
%
P 16,560
Income Statement
P Co.
P540,000
S Co.
P360,000
Dividend income
Total Revenue
Cost of goods sold
48,000
P588,000
P216,000
P360,000
P192,000
60,000
24,000
Interest expense
Other expenses
Goodwill impairment loss
Total Cost and Expenses
72,000
P348,000
P240,000
54,000
P270,000
P
90,000
Depreciation expense
Dr.
Cr.
(5)
48,000
Consolidated
P 900,000
___________
P
P
(4)
6,000
(4)
1,200
900,000
408,000
90,000
1,200
P
P
126,000
625,200
274,800
P492,000
240,000
P732,000
P144,000
90,000
P234,000
(4)
16,800
(2)
144,000
(1)
24,000
499,200
274,800
P 774,000
72,000
72,000
(5)
48,000
48,000
________
P660,000
P186,000
P 702,000
Cash.
Accounts receivable..
P
189,000
180,000
P
102,000
960,000
P 291,000
276,000
Inventory.
216,000
108,000
Land.
Equipment
252,000
240,000
48,000
180,000
Buildings
720,000
540,000
Balance Sheet
(3)
4,800
(3)
15,000
(3)
6,000
(3)
7,200
465,000
(1)
24,000
(4)
6,000
324,000
265,200
420,000
(3)
216,000
(4)
2,400
(4)
3,600
(2)
384,000
(3) 105,00
0
1,044,000
2,400
11,400
Total
Accumulated depreciation
equipment
Accumulated depreciation
buildings
Accounts payable
Bonds payable
Common stock, P10 par
Common stock, P10 par
Retained earnings, from above
Total
P2,220,000
P1,074,0
00
P 150,000
P
102,000
450,000
306,000
120,000
240,000
600,000
120,000
120,000
660,000
P2,220,000
240,000
186,000
P1,074,0
00
P2,634,000
(3)
96,000
(3)
192,000
(4)
12,000
(4)
24,000
P 180,000
552,000
240,000
360,000
600,000
(2)
240,000
702,000
P
783,120
P
783,120
P2,634,000
5. 1/1/20x4
a.
P360,000
P 600,000
360,000
P 960,000
6. 12/31/20x4:
a. P211,200 same with CNI since there is no NCI.
Consolidated Net Income for 20x4
Net income from own/separate operations:
Pa Company
S Company
Total
Less: Amortization of allocated excess
Goodwill impairment loss
Consolidated Net Income for 20x4
P168,000
60,000
P228,000
P 13,200
3,600
16,800
P211,200
P360,000
211,200
P571,200
72,000
P499,200
*since it is a 100%-owned subsidiary, Controlling Interest in Net Income is the same with Consolidated Net
Income.
P 600,000
499,200
P
1,099,200
12/31/20x5
a. P274,800 same with CNI since there is no NCI.
Consolidated Net Income for 20x5
Net income from own/separate operations
P Company
S Company
Total
Less: Amortization of allocated excess
Goodwill impairment loss
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent or CNI
P192,000
90,000
P282,000
P 7,200
0
7,200
P274,800
P492,000
P 144,000
120,000
P 24,000
16,800
P
7,200
100%
274,800
P774,000
72,000
P702,000
P 600,000
702,000
P1,302,000
Problem VI
Requirements 1 to 4:
Schedule of Determination and Allocation of Excess (Partial-goodwill)
Date of Acquisition January 1, 20x4
Fair value of Subsidiary (80%)
Consideration
transferred..
Less: Book value of stockholders equity of S:
Common stock (P240,000 x 80%)
.
Retained earnings (P120,000 x 80%)
...
Allocated excess (excess of cost over book value)
..
Less: Over/under valuation of assets and liabilities:
Increase in inventory (P6,000 x 80%)
P 372,000
P 192,000
96,000
288,000
P
84,000
P 4,800
5,760
76,800
( 19,200)
3,840
72,000
P 12,000
S Co.
Fair value
7,200
P 499,200
(Over) Under
Valuation
Inventory.
..
P 24,000
30,000
6,000
Land
48,000
55,200
7,200
Equipment (net).........
84,000
180,000
96,000
168,000
144,000
(24,000)
Bonds payable
(120,000)
( 115,200)
4,800
Net..
P 204,000
P 294,000
P 90,000
Buildings (net)
The buildings and equipment will be further analyzed for consolidation purposes as follows:
Equipment ..................
Less: Accumulated
depreciation..
Net book
value...
Buildings................
Less: Accumulated
depreciation..
Net book
value...
S Co.
Book value
S Co.
Fair value
Increase
(Decrease)
180,000
180,000
96,000
( 96,000)
84,000
180,000
96,000
S Co.
Book value
S Co.
Fair value
(Decrease)
360,000
144,000
( 216,000)
192,000
( 192,000)
168,000
144,000
24,000)
Adjustments
to
Inventory
be
Over/
Under
P
6,000
Lif
e
Current
Year(20x4)
Annual
Amount
P
6,000
P 6,000
P
-
96,000
(25,00
0)
4,80
0
12,000
12,000
12,000
( 6,000)
1,20
0
P
13,200
( 6,000)
1,200
(6,000)
1,20
0
P 13,200
P 7,200
20x5
The goodwill impairment loss of P3,125 based on 100% fair value would be allocated to the
controlling interest and the NCI based on the percentage of total goodwill each equity
interest received. For purposes of allocating the goodwill impairment loss, the full-goodwill is
computed as follows:
Fair value of Subsidiary (100%)
P 372,000
93,000
P 465,000
__360,000
105,000
90,000
P
15,000
In this case, the goodwill was proportional to the controlling interest of 80% and noncontrolling interest of 20% computed as follows:
Value
P12,000
3,000
P15,000
% of Total
80.00%
20.00%
100.00%
Value
P 3,000
% of Total
80.00%
750
20.00%
P 3,750
100.00%
When cost model is used, only two journal entries are recorded by P Company during 20x4
related to its investment in S Company.
January 1, 20x4:
(1) Investment in S Company
Cash.
.
Acquisition of S Company.
January 1, 20x4 December 31, 20x4:
(2) Cash
372,000
372,000
28,800
28,800
On the books of S Company, the P30,000 dividend paid was recorded as follows:
Dividends paid
Cash.
Dividends paid by S Co..
36,000
36,000
240,000
120.000
288,000
72,000
(E2)
Inventory.
Accumulated depreciation equipment..
Accumulated depreciation buildings..
Land
.
Discount
on
bonds
payable.
Goodwill.
Buildings..
Non-controlling interest (P90,000 x 20%)
..
Investment in S Co.
6,000
96,000
192,000
7,200
4,800
12,000
216,000
18,000
84,000
6,000
6,000
6,000
1,200
3,000
6,000
12,000
1,200
3,000
Cost of
Goods
Sold
Inventory sold
Equipment
Buildings
Bonds payable
Totals
Depreciation/
Amortization
expense
Amortizatio
n
-Interest
Total
P
6,000
_______
P 6,000
P 12,000
( 6,000)
_______
P 6,000
P 1,200
P1,200
13,20
0
It should be observed that the goodwill computed above was proportional to the controlling
interest of 80% and non-controlling interest of 20% computed as follows:
Value
P12,000
3,000
P15,000
% of Total
80.00%
20.00%
100.00%
Therefore, the goodwill impairment loss of P3,125 based on 100% fair value or full-goodwill
would be allocated as follows:
Value
P 3,000
% of Total
80.00%
750
20.00%
P 3,750
100.00%
28,800
7,200
36,000
(E5)
Non-controlling
interest
in
Subsidiary
Non-controlling interest ..
Net
Income
of
9,360
9,360
interest
P 60,000
( 13,200)
P 46,800
20%
P 9,360
Non-controlling
Income Statement
P Co
P480,000
S Co.
P240,000
Dividend income
Total Revenue
28,800
P508,800
P240,000
P204,000
P138,000
Depreciation expense
60,000
28,000
Interest expense
Other expenses
48,000
18,000
P310,000
P196,800
P180,000
P 60,000
P196,800
P 60,000
Dr.
Cr.
(4)
28,800
Consolidated
P 720,000
_________
P 720,000
P 348,000
(3)
6,000
(3)
6,000
(3)
1,200
90,000
1,200
66,000
3,000
(3)
3,000
P508,200
P211,800
( 9,360)
(5)
9,360
P202,440
P
360,000
P360,000
196,800
P552,000
P120,000
60,000
P180,000
(1)
120,000
202,440
P562,440
72,000
72,000
36,000
P484,800
P144,000
(4)
36,000
________
P
490,440
Balance Sheet
Cash.
Accounts receivable..
P
232,800
90,000
P 90,000
60,000
Inventory.
120,000
90,000
Land.
Equipment
210,000
240,000
48,000
180,000
Buildings
720,000
540,000
Total
Accumulated depreciation
equipment
Accumulated depreciation
buildings
Accounts payable
Bonds payable
Common stock, P10 par
Common stock, P10 par
Retained earnings, from above
372,000
P1,984,800
P1,008,0
00
P 135,000
P 96,000
405,000
120,000
240,000
600,000
484,800
Non-controlling interest
_________
Total
(2)
6,000
(2)
7,200
(2)
4,800
(2)
12,000
P1,984,800
______
___
P1,008,0
00
(3)
6,000
210,000
265,200
420,000
(2)
216,000
(3)
1,200
(3)
3,000
(4) 288,000
(5) 84,000
1,044,000
3,600
9,000
P2,424,600
(2)
96,000
(2)
192,000
288,000 (3)
6,000
120,000
120,000
240,000
144,000
322,800
150,000
(3)
12,000
P147,000
495,000
240,000
360,000
600,000
(1)
240,000
490,440
(1 )
72,000 (2)
(4) 7,200 18,000
(5)
__________
9,360
P
P
745,560
745,560
____92,160
P2,424,600
P Co.
P 540,000
216,000
P 324,000
60,000
72,000
P 192,000
38,400
P 230,400
P 72,000
S Co.
P 360,000
192,000
P 168,000
24,000
54,000
P 90,000
P 90,000
P 48,000
Only a single entry is recorded by the P in 20x5 in relation to its subsidiary investment:
38,400
38,400
On the books of S Company, the P40,000 dividend paid was recorded as follows:
Dividends paid
Cash
Dividends paid by S Co..
48,000
48,000
The working paper eliminations (in journal entry format) on December 31, 20x5, are as
follows:
19,200
19,200
P144,000
120,000
P 24,000
80%
P 19,200
240,000
144,000
307,200
76,800
(E3)
Inventory.
Accumulated depreciation equipment..
Accumulated depreciation buildings..
Land
.
Discount
on
bonds
payable.
Goodwill.
Buildings..
Non-controlling interest (P90,000 x 20%)
Investment in S Co.
20x5.
6,000
96,000
192,000
7,200
4,800
12,000
216,000
18,000
84,000
Inventory sold
Equipment
Buildings
Bonds payable
Sub-total
Multiplied by:
To Retained earnings
Impairment loss
(20x4)
Retaine
d
earnings
,
P
6,000
12,000
(6,000)
1,20
0
P13,200
80%
P
10,560
3,00
0
Depreciation/
Amortization
expense
Amortizatio
n
-Interest
P 12,000
( 6,000)
________
P 1,200
P 6,000
P 1,200
13,560
2,640
6,000
12,000
1,200
6,000
24,000
2,400
3,000
Total
P
13,560
38,400
9,600
48,000
(E6)
Non-controlling
interest
in
Subsidiary
Non-controlling interest ..
Net
Income
of
16,560
16,560
Non-controlling
interest
P 90,000
(
7,200)
P 82,800
20
%
P 16,560
Income Statement
P Co
P540,000
S Co.
P360,000
Dividend income
Total Revenue
Cost of goods sold
38,400
P578,400
P216,000
P360,000
P192,000
60,000
24,000
Interest expense
Other expenses
Goodwill impairment loss
Total Cost and Expenses
72,000
P348,000
Net Income
P230,400
54,000
P270,000
P
90,000
P230,400
Depreciation expense
Dr.
(5)
38,400
Cr.
Consolidated
P 900,000
___________
P
P
(4)
6,000
(4)
1,200
900,000
408,000
90,000
1,200
126,000
P 625,200
P 274,800
(6)
16,560
( 16,560)
P 258,240
90,000
Statement of Retained Earnings
Retained earnings, 1/1
P Company
S Company
Net income, from above
Total
Dividends paid
P Company
S Company
Retained earnings, 12/31 to Balance
Sheet
P484,800
230,400
P715,200
(4) 13,56
0
(2)
P
144,00
144,000
0
90,000
P234,000
(1) 19,200
P 490,440
258,240
P 748,680
72,000
72,000
(5)
48,000
48,000
________
P643,200
P186,000
P 676,680
Cash.
Accounts receivable..
P
265,200
180,000
P
114,000
96,000
P 367,200
276,000
Inventory.
216,000
108,000
Land.
Equipment
210,000
240,000
48,000
180,000
Buildings
720,000
540,000
Balance Sheet
(3)
4,800
(3)
12,000
(3)
6,000
(3)
7,200
372,000
(1)
19,200
Total
Accumulated depreciation
equipment
Accumulated depreciation
buildings
Accounts payable
Bonds payable
Common stock, P10 par
Common stock, P10 par
Retained earnings, from above
P2,203,200
P1,074,0
00
P 150,000
P
102,000
450,000
306,000
120,000
240,000
600,000
120,000
120,000
643,200
240,000
186,000
(3)
96,000
(3)
192,000
(4)
12,000
Total
5. 1/1/20x4
P2,203,200
______
___
P1,074,0
00
324,000
265,200
420,000
(3)
216,000
(4)
2,400
(4)
3,000
(2)
307,200
(3)
84,000
1,044,000
2,400
9,000
(4)
24,000
P180,000
552,000
240,000
360,000
600,000
(2)
240,000
676,680
9,600
(4)
2,640
___
_____
6,000
P2,707,800
(5)
Non-controlling interest
(4)
__________
P
821,160
(2 )
76,800 (3)
18,000
(6)
16,560
P
821,160
____99,120
P2,707,800
a.
P360,000
b.
Non-controlling interest (partial-goodwill), January 1, 20x4
P 240,000
Common stock S Company, January 1, 20x4
Retained earnings S Company, January 1, 20x4
Stockholders equity S Company, January 1, 20x4
Adjustments to reflect fair value - (over) undervaluation of assets and
liabilities, date of acquisition (January 1, 20x4)
Fair value of stockholders equity of subsidiary, January 1, 20x4
Multiplied by: Non-controlling Interest percentage...
Non-controlling interest (partial-goodwill)..
120,000
P 360,000
90,000
P450,000
20
P 90,000
c.
Consolidated SHE:
Stockholders Equity
Common stock, P10 par
Retained earnings
Ps Stockholders Equity / CI - SHE
NCI, 1/1/20x4
Consolidated SHE, 1/1/20x4
P 600,000
360,000
P 960,000
___90,000
P1,050,000
6.
Note: The goodwill recognized on consolidation purely relates to the Ps share. NCI is
measured as a proportion of identifiable assets and goodwill attributable to NCI share is
not recognized.
12/31/20x4:
a. CI-CNI
Consolidated Net Income for 20x4
Net income from own/separate operations
P Company
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess (refer to amortization above)
Goodwill impairment (impairment under partial-goodwill approach)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20x4
P168,000
60,000
P228,000
P 9,360
13,200
3,000
25,560
P202,440
9,360
P211.800
b. NCI-CNI
*Non-controlling Interest in Net Income (NCINI) for 20x4
Net income of S Company
Less: Amortization of allocated excess / goodwill impairment
(refer to amortization table above)
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI)
P 60,000
13,200
P 46,800
20%
P 9,360
P360,000
202,440
P562,440
72,000
P490,440
e.
Non-controlling interest (partial-goodwill), December 31, 20x4
P 240,000
Common stock S Company, December 31, 20x4
Retained earnings S Company, December 31, 20x4
Retained earnings S Company, January 1, 20x4
Add: Net income of S for 20x4
Total
Less: Dividends paid 20x4
Stockholders equity S Company, December 31, 20x4
Adjustments to reflect fair value - (over) undervaluation of assets and
liabilities, date of acquisition (January 1, 20x4)
Amortization of allocated excess (refer to amortization above) 20x4
Fair value of stockholders equity of subsidiary, December 31, 20x4
Multiplied by: Non-controlling Interest percentage...
Non-controlling interest (partial-goodwill)..
f.
Consolidated SHE:
P120,000
60,000
P180,000
36,000
144,000
P 384,000
90,000
( 13,200)
P460,000
20
P 92,160
Stockholders Equity
Common stock, P10 par
Retained earnings
Ps Stockholders Equity / CI SHE, 12/31/20x4
NCI, 12/31/20x4
Consolidated SHE, 12/31/20x4
P 600,000
490,440
P1,090,440
___92,160
P1,182,600
12/31/20x5:
a. CI-CNI
Consolidated Net Income for 20x5
Net income from own/separate operations:
P Company
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess (refer to amortization above)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20x5
P192,000
90,000
P282,000
P16,560
__7,200
23,760
P258,240
16,560
P274,800
b. NCI-CNI
*Non-controlling Interest in Net Income (NCINI) for 20x5
Net income of S Company
Less: Amortization of allocated excess / goodwill impairment for 20x5
(refer to amortization table above)
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI) for 20x5
P 90,000
80,400
P 82,800
20%
P 16,560
P484,800
P 144,000
120,000
P 24,000
13,200
P
10,800
80%
P
8,640
3,000
5,640
P 490,440
258,240
P748,680
72,000
P676,680
*this procedure would be more appropriate, instead of multiplying the full-goodwill impairment loss of
P3,750 by 80%. There might be situations where the controlling interests on goodwill impairment loss would
not be proportionate to NCI acquired.
e.
Non-controlling interest (partial-goodwill), December 31, 20x5
P 240,000
Common stock S Company, December 31, 20x5
Retained earnings S Company, December 31, 20x5
Retained earnings S Company, January 1, 20x5
Add: Net income of S for 20x5
Total
Less: Dividends paid 20x5
Stockholders equity S Company, December 31, 20x5
Adjustments to reflect fair value - (over) undervaluation of assets and
liabilities, date of acquisition (January 1, 20x4)
Amortization of allocated excess (refer to amortization above) :
20x4
20x5
Fair value of stockholders equity of S, December 31, 20x5
Multiplied by: Non-controlling Interest percentage...
Non-controlling interest (partial goodwill)..
P14,000
90,000
P234,000
48,000
186,000
P 426,000
90,000
P
13,200
7,200
( 20,400)
P 495,600
20
P 99,120
f.
Consolidated SHE:
Stockholders Equity
Common stock, P10 par
Retained earnings
Parents Stockholders Equity / CI SHE, 12/31/20x5
NCI, 12/31/20x5
Consolidated SHE, 12/31/20x5
P 600,000
676,680
P1,276,680
___99,120
P1,1375,80
0
Problem VII
Requirements 1 to 4:
Schedule of Determination and Allocation of Excess
Date of Acquisition January 1, 20x4
Fair value of Subsidiary (80%)
Consideration transferred (80%)..
Fair value of NCI (given) (20%)..
P 372,000
93,000
P 465,000
P 240,000
120,000
360,000
P 105,000
6,000
7,200
96,000
( 24,000)
4,800
90,000
P 15,000
Adjustments
to
Inventory
Subject to Annual Amortization
Equipment (net).........
Buildings (net)
Bonds payable
be
Over/
under
P
6,000
96,000
(24,00
0)
4,80
0
Lif
e
Current
Year(20x4)
Annual
Amount
P
6,000
P 6,000
P
-
12,000
12,000
12,000
( 6,000)
1,20
0
P
13,200
( 6,000)
1,200
(6,000)
1,20
0
P 13,200
P 7,200
20x5
January 1, 20x4:
(1) Investment in S Company
Cash.
.
Acquisition of S Company.
January 1, 20x4 December 31, 20x4:
(2) Cash
Dividend income (P36,000x 80%).
Record dividends from S Company.
372,000
372,000
28,800
28,800
On the books of S Company, the P30,000 dividend paid was recorded as follows:
Dividends paid
Cash.
Dividends paid by S Co..
36,000
36,000
No entries are made on the Ps books to depreciate, amortize or write-off the portion of the
allocated excess that expires during 20x4.
240,000
120.000
288,000
72,000
(E2)
Inventory.
Accumulated depreciation equipment..
Accumulated depreciation buildings..
Land
.
Discount
on
bonds
payable.
Goodwill.
Buildings..
Non-controlling interest (P90,000 x 20%) + [(P15,000,
full
P12,000, partial goodwill)]
Investment in S Co.
6,000
96,000
192,000
7,200
4,800
13,000
216,000
21,000
84,000
Cost of
Goods
Depreciation/
Amortization
Amortizatio
6,000
6,000
6,000
1,200
3,750
6,000
12,000
1,200
3,750
Sold
Inventory sold
Expense
n
-Interest
P
6,000
Equipment
Buildings
Bonds payable
Totals
_______
P 6,000
P12,000
( 6,000)
_______
P 6,000
P 1,200
P1,200
28,800
7,200
36,000
(E5)
Non-controlling
interest
in
Subsidiary
Non-controlling interest ..
Net
Income
of
8,610
8,610
by:
Non-controlling
interest
P 60,000
( 13,200)
P 46,800
20%
P
9,360
750
P
8,610
Subsidiary accounts are adjusted to full fair value regardless on the controlling interest
percentage or what option used to value non-controlling interest or goodwill.
Sales
Income Statement
P Co
P480,000
S Co.
P240,000
Dividend income
Total Revenue
28,800
P508,800
P240,000
P204,000
P138,000
Depreciation expense
60,000
24,000
Interest expense
Other expenses
48,000
18,000
P312,000
P196,800
P180,000
P 60,000
P196,800
P 60,000
Dr.
Cr.
(4)
28,800
Consolidated
P 720,000
_________
P 720,000
P 348,000
(3)
6,000
(3)
6,000
(3)
1,200
90,000
1,200
66,000
3,750
(3)
3,750
P508,950
P211,050
( 8,610)
(5)
8,610
P202,680
P
360,000
P360,000
196,800
P556,800
P120,000
60,000
P180,000
(1)
120,000
202,680
P562,440
72,000
86,400
36,000
P484,800
P144,000
Cash.
Accounts receivable..
P
232,800
90,000
P 90,000
60,000
Inventory.
120,000
90,000
Land.
Equipment
210,000
240,000
48,000
180,000
Buildings
720,000
540,000
(4)
36,000
________
P
490,440
Balance Sheet
Total
Accumulated depreciation
equipment
Accumulated depreciation
buildings
Accounts payable
Bonds payable
Common stock, P10 par
Common stock, P10 par
(2)
6,000
(2)
7,200
(2)
4,800
(2)
15,000
372,000
P1,984,800
P1,008,0
00
P 135,000
P 96,000
405,000
120,000
240,000
600,000
210,000
265,200
420,000
(2)
216,000
(3)
1,200
(3)
3,750
(3) 288,000
(4) 84,000
1,044,000
3,600
11,250
P2,426,850
(2)
96,000
(5)
192,000
288,000 (6)
6,000
120,000
120,000
240,000
(3)
6,000
322,800
150,000
(1)
240,000
(3)
12,000
P147,000
495,000
240,000
360,000
600,000
484,800
144,000
Non-controlling interest
_________
Total
P1,984,800
______
___
P1,984,8
00
490,440
(1 )
72,000 (2)
(7) 7,200 21,000
(5)
__________
8,610
P
P
748,560
748,560
____94,410
P2,426,850
Sales
Less: Cost of goods sold
Gross profit
Less: Depreciation expense
Other expense
Net income from its own separate operations
Add: Dividend income
Net income
Dividends paid
S Co.
P 360,000
192,000
P 168,000
24,000
54,000
P 90,000
P 90,000
P 48,000
38,400
38,400
On the books of S Company, the P40,000 dividend paid was recorded as follows:
Dividends paid
Cash
Dividends paid by S Co..
48,000
48,000
P144,000
19,200
19,200
120,000
P 24,000
80%
P 19,200
240,000
144,000
307,200
76,800
(E3)
Inventory.
Accumulated depreciation equipment..
Accumulated depreciation buildings..
Land
.
Discount
on
bonds
payable.
Goodwill.
Buildings..
Non-controlling interest (P90,000 x 20%) + [(P15,000,
full
P12,000, partial goodwill)]
Investment in S Co.
20x5.
6,000
96,000
192,000
7,200
4,800
15,000
216,000
21,000
84,000
13,560
3,390
6,000
12,000
1,200
6,000
24,000
2,400
3,750
(20x4)
Retaine
d
earnings
,
P
6,000
12,000
(6,000)
1,200
3,75
0
P
16,950
80
%
P13,560
Inventory sold
Equipment
Buildings
Bonds payable
Impairment loss
Totals
Multiplied by: CI%....
To Retained earnings
Depreciation/
Amortization
expense
Amortizatio
n
-Interest
12,000
( 6,000)
P 1,200
P 6,000
P1,200
38,400
9,600
48,000
(E6)
Non-controlling
interest
in
Subsidiary
Non-controlling interest ..
Net
Income
of
16,560
16,560
by:
Non-controlling
interest
P 90,000
(
7,200)
P 82,800
20
%
P 16,560
Goodwill
Non-controlling
(NCINI)
0
Interest in Net Income
P 16,560
Income Statement
P Co
P540,000
S Co.
P360,000
38,400
P578,400
P216,000
P360,000
P192,000
60,000
24,000
Interest expense
Other expenses
Goodwill impairment loss
Total Cost and Expenses
72,000
P348,000
Net Income
P230,400
54,000
P270,000
P
90,000
Sales
Dividend income
Total Revenue
Cost of goods sold
Depreciation expense
P230,400
P
90,000
Dr.
Cr.
(5)
38,400
Consolidated
P 900,000
___________
P
P
900,000
408,000
90,000
(4)
6,000
(4)
1,200
1,200
126,000
P 625,200
P 274,800
(6)
16,560
( 16,560)
P 258,240
P484,800
230,400
P715,200
(5) 13,56
0
(6)
P
144,00
144,000
0
90,000
P234,000
(5) 19,200
P 490,440
258,240
P 748,680
72,000
72,000
(5)
57,600
48,000
________
P643,200
P186,000
P 676,680
Cash.
Accounts receivable..
P
265,200
180,000
P
102,000
96,000
P 367,200
276,000
Inventory.
216,000
108,000
Land.
Equipment
210,000
240,000
48,000
180,000
Buildings
720,000
540,000
Balance Sheet
(3)
4,800
(3)
15,000
(1)
19,200
Total
Accumulated depreciation
equipment
Accumulated depreciation
buildings
Accounts payable
(3)
6,000
(3)
7,200
372,000
P2,203,200
P1,074,0
00
P 150,000
P
102,000
450,000
306,000
120,000
120,000
(4)
6,000
324,000
265,200
420,000
(3)
216,000
(4)
2,400
(4)
3,750
(2)
307,200
(7) 84,000
1,044,000
2,400
11,250
P2,710,050
(3)
96,000
(3)
192,000
(4)
12,000
(4)
24,000
P180,000
552,000
240,000
Bonds payable
Common stock, P10 par
Common stock, P10 par
Retained earnings, from above
240,000
600,000
643,200
120,000
240,000
186,000
360,000
600,000
(2)
240,000
676,680
(6)
Non-controlling interest
___
_____
Total
P2,203,200
______
___
P1,074,0
00
(2 )
9,600
76,800 (3)
(8)
3,390 21,000
(6)
__________
16,560
P
P
824,910
824,910
____101,370
P2,710,050
5. 1/1/20x4
a. On date of acquisition the retained earnings of parent should always be considered as
the consolidated retained earnings, thus:
P360,000
b.
Non-controlling interest (full-goodwill), January 1, 20x4
P 240,000
Common stock S Company, January 1, 20x4
Retained earnings S Company, January 1, 20x4
Stockholders equity S Company, January 1, 20x4
Adjustments to reflect fair value - (over) undervaluation of assets and
liabilities, date of acquisition (January 1, 20x4)
Fair value of stockholders equity of S, January 1, 20x4
Multiplied by: Non-controlling Interest percentage...
Non-controlling interest (partial-goodwill)..
Add: NCI on full-goodwill (P15,000 P12,000)
Non-controlling interest (partial-goodwill)..
120,000
P 360,000
90,000
P450,000
20
P 90,000
___3,000
P 93,000
c.
Consolidated SHE:
Stockholders Equity
Common stock, P10 par
Retained earnings
Parents Stockholders Equity / CI - SHE
NCI, 1/1/20x4
Consolidated SHE, 1/1/20x4
P 600,000
360,000
P 960,000
___93,000
P1,053,000
6.
Note: The goodwill recognized on consolidation purely relates to the parents share. NCI is
measured as a proportion of identifiable assets and goodwill attributable to NCI share is
not recognized.
12/31/20x4:
a. CI-CNI P202,440
Consolidated Net Income for 20x4
Net income from own/separate operations:
P Company
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess (refer to amortization above)
Goodwill impairment (impairment under full-goodwill approach)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of P..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20x4
P168,000
60,000
P228,000
P 8,610
13,200
3,750
25,560
P202,440
8,610
P211.050
b. NCI-CNI P8,610
*Non-controlling Interest in Net Income (NCINI) for 20x4
Net income of S Company
Less: Amortization of allocated excess (refer to amortization table above)
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI)
Less: Non-controlling interest on impairment loss on full-goodwill (P3,750
x 20%)
or (P3,750 impairment on full-goodwill less P3,000, impairment on
partial-goodwill)*
Non-controlling Interest in Net Income (NCINI)
P 60,000
13,200
P 46,800
20%
P
9,360
750
P 8,610
*this procedure would be more appropriate, instead of multiplying the full-goodwill impairment
loss of P3,750 by 20%. There might be situations where the NCI on goodwill impairment loss
would not be proportionate to NCI acquired.
P360,000
202,440
P562,440
72,000
P490,440
e.
Non-controlling interest (full-goodwill), December 31, 20x4
P 240,000
Common stock S Company, December 31, 20x4
Retained earnings S Company, December 31, 20x4
Retained earnings S Company, January 1, 20x4
Add: Net income of S for 20x4
Total
Less: Dividends paid 20x4
Stockholders equity S Company, December 31, 20x4
Adjustments to reflect fair value - (over) undervaluation of assets and
liabilities, date of acquisition (January 1, 20x4)
Amortization of allocated excess (refer to amortization above) 20x4
Fair value of stockholders equity of S, December 31, 20x4
Multiplied by: Non-controlling Interest percentage...
Non-controlling interest (partial-goodwill, 12/31/20x4..
Add: Non-controlling interest on full goodwill , net of impairment loss,
12/31/x4:
[(P15,000 full P12,000, partial = P3,000) P750 impairment loss
Non-controlling interest (full-goodwill), 12/31/20x4..
P120,000
60,000
P180,000
36,000
144,000
P 384,000
90,000
( 13,200)
P460,800
20
P 92,160
2,250
P 94,410
f.
Consolidated SHE:
Stockholders Equity
Common stock, P10 par
Retained earnings
Ps Stockholders Equity / CI SHE, 12/31/20x4
NCI, 12/31/20x4
Consolidated SHE, 12/31/20x4
P 600,000
490,440
P1,090,440
___94,410
P1,184,850
12/31/20x5:
a. CI-CNI P258,240
Consolidated Net Income for 20x5
Net income from own/separate operations
P Company
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess (refer to amortization above)
Goodwill impairment (impairment under full-goodwill approach)
Controlling Interest in Consolidated Net Income or Profit attributable to
P192,000
90,000
P282,000
P16,560
7,200
0
23,760
P258,240
16,560
P274,800
b. NCI-CNI P16,560
*Non-controlling Interest in Net Income (NCINI) for 20x5
Net income of S Company
Less: Amortization of allocated excess / goodwill impairment for 20x5
(refer to amortization table above)
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI) for 20x5
P 90,000
80,400
P 82,800
20%
P 16,560
P484,800
P 144,000
120,000
P 24,000
13,200
P
10,800
80%
P
8,640
3,000
5,640
P 490,440
258,240
P748,680
72,000
P676,680
*this procedure would be more appropriate, instead of multiplying the full-goodwill impairment loss of
P3,750 by 80%. There might be situations where the controlling interests on goodwill impairment loss would
not be proportionate to NCI acquired.
e.
Non-controlling interest (partial-goodwill), December 31, 20x5
P 240,000
Common stock S Company, December 31, 20x5
P144,000
90,000
P234,000
48,000
186,000
P 426,000
90,000
P
13,200
7,200
( 20,400)
P 495,600
20
P 99,120
2,250
P 101,370
f.
Consolidated SHE:
Stockholders Equity
Common stock, P10 par
Retained earnings
Ps Stockholders Equity / CI SHE, 12/31/20x4
NCI, 12/31/20x4
Consolidated SHE, 12/31/20x4
P 600,000
676,680
P1,276,680
__101,370
P1,378,050
Problem VIII
Under the acquisition method, the shares issued by WW are recorded at fair value:
Investment in BB (value of debt and shares issued)...................
Common Stock (par value)....................................................
Additional Paid-in Capital (excess over par value).................
Liabilities...............................................................................
900,000
150,000
450,000
300,000
The payment to the broker is accounted for as an expense. The stock issue cost is a
reduction in additional paid-in capital.
Acquisition expense....................................................................
Additional Paid-in Capital............................................................
Cash ..................................................................................
30,000
40,000
70,000
P900,000
770,000
P130,000
100,000
(20,000)
P 50,000
Consolidated Balances:
1. Net income (adjusted for combination expenses. The
figures earned by the subsidiary prior to the takeover
are not included)..............................................................................
2. Retained Earnings, 1/1 (the figures earned by the subsidiary
prior to the takeover are not included).............................................
3. Patented Technology (the parent's book value plus the fair
value of the subsidiary)....................................................................
4. Goodwill (computed above)...............................................................
5. Liabilities (the parent's book value plus the fair value
of the subsidiary's debt plus the debt issued by the parent
in acquiring the subsidiary)..............................................................
6.
Common Stock (the parent's book value after recording
the newly-issued shares)..................................................................
7.
Additional Paid-in Capital (the parent's book value
after recording the two entries above).............................................
Problem IX
1. P15,000
2. P65,000
3. SS: P24,000
4.
BB P70,000
Fair value of SS as a
whole:
P200,000
10,000
=
=
=
1,210,000
Problem X
1.
Investment in WP, Inc.
Contingent performance obligation
Cash
2.
1,180,000
50,000
9,000
P259,000
65 percent
Capital Stock
Retained Earnings
800,000
40,000
5.
6.
P210,000
500,000
35,000
465,000
5,000
10,000
5,000
510,000
680,000
10,000
50,000
50,000
30,000
200,000
180,000
Royalty agreements
Goodwill
Investment in WP
90,000
60,000
Dividend income
Dividends paid
35,000
Amortization expense
Royalty agreements
10,000
30,000
380,000
150,000
35,000
10,000
_____-0P20,000
1. Consolidated copyrights
PP (book value) .....................................................
P900,000
SS (book value) .....................................................
400,000
Allocation (above) .................................................
120,000
Excess amortizations, 20x4 ..................................
(20,000)
Total ................................................................ P1,400,000
2. Consolidated net income, 20X4
Revenues (add book values) .................................
Expenses:
Add book values ..............................................
Excess amortizations .......................................
Consolidated net income.......................................
3. Consolidated retained earnings, 12/31/x4
Retained earnings 1/1/x4 (PP) ...............................
Net income 20x4 (above) ......................................
Dividends paid 20x4 (PP) ......................................
P1,100,000
P700,000
20,000
P600,000
380,000
(80,000)
720,000
P380,000
Total ................................................................
P900,000
SSs retained earnings balance as of January 1, 20x4, is not included because
these operations occurred prior to the purchase. SS's dividends were paid to PP
and therefore are excluded because they are intercompany in nature.
4. Consolidated goodwill, 12/31/x4
Allocation (above) ................................................
P80,000
Problem XII
Consolidated balances three years after the date of acquisition. Includes questions about
parent's method of recording investment for internal reporting purposes.)
1. Acquisition-Date Fair Value Allocation and Amortization:
Consideration transferred 1/1/09 ..................... P600,000
Book value (given) .......................................... (470,000)
Annual
Fair value in excess of book value ............. 130,000
Excess
Allocation to equipment based on
Life Amortizations
difference in fair value and
book value .................................................
90,000 10 yrs.
P9,000
Goodwill .......................................................... P40,000 indefinite
-0Total ...........................................................
P9,000
Consolidated Balances
Depreciation expense = P659,000 (book values plus P9,000 excess
depreciation)
Dividends Paid = P120,000 (parent balance only. Subsidiary's dividends are
eliminated as intercompany transfer)
Revenues = P1,400,000 (add book values)
Equipment = P1,563,000 (add book values plus P90,000 allocation less three
years of excess depreciation [P27,000])
Buildings = P1,200,000 (add book values)
Goodwill = P40,000 (original residual allocation)
Common Stock = P900,000 (parent balance only)
2. The parent's choice of an investment method has no impact on the consolidated
totals. The choice of an investment method only affects the internal reporting of
the parent. Under PAS 27, it requires a choice between cost model or under PFRS
9 (known as fair value model)
3. The cost model or initial value method is used. The parent's Investment in
Subsidiary account still retains the original consideration transferred of P600,000.
In addition, the Investment Income account equals the amount of dividends paid
by the subsidiary.
4. If the equity method had been applied which is not allowed under PAS 27 for a
parent to consolidate, the Investment Income account would have included both
the equity accrual of P100,000 and excess amortizations of P9,000 for a balance
of P91,000.
Problem XIII
1. Net income for 20x4:
Operating income
Income from subsidiary
Net income
QQ
P 90,000
24,500
P114,500
NN
P35,000
P35,000
QQ
P290,000
114,500
(30,000)
P374,500
NN
P40,000
35,000
(10,000)
P65,000
4. Consolidated retained earnings at December 31, 20x4, is equal to the P374,500 retained
earnings balance reported by QQ.
5. When the cost method is used, the parent's proportionate share of the increase in
retained earnings of the subsidiary subsequent to acquisition is not included in the
parent's retained earnings. Thus, this amount must be added to the total retained
earnings reported by the parent in arriving at consolidated retained earnings.
Problem XIV
(Several valuation and income determination questions for a business combination involving
a non-controlling interest.)
Business combinations are recorded generally at the fair value of the consideration
transferred by the acquiring firm plus the acquisition-date fair value of the non-controlling
interest.
PSs consideration transferred (P31.25 80,000 shares)............................. P2,500,000
Non-controlling interest fair value (P30.00 20,000 shares)........................
P600,000
SRs total fair value 1/1/09............................................................................ P3,100,000
1.
Each identifiable asset acquired and liability assumed in a business combination should
initially be reported at its acquisition-date fair value.
2.
In periods subsequent to acquisition, the subsidiarys assets and liabilities are reported
at their acquisition-date fair values adjusted for amortization and depreciation. Except for
certain financial items, they are not continually adjusted for changing fair values.
(435,000)
P365,000
20%
P73,000
To controlling interest:
Consolidated net income......................................................................... P1,615,000
Non-controlling interest share of consolidated net income......................
(73,000)
Controlling interest share of consolidated net income............................. P1,542,000
-ORPSs
PSs
PSs
PSs
revenues.......................................................................................... P3,000,000
expenses.......................................................................................... 1,750,000
separate net income........................................................................ P1,250,000
share of SRs adjusted net income
(80% P365,000)........................................................................
292,000
Controlling interest share of consolidated net income............................. P1,542,000
5. Fair value of non-controlling interest January 1, 20x4...................................
20x4 income ...................................................................................73,000
Dividends (20% P30,000)..........................................................................
Non-controlling interest December 31, 20x4.................................................
P600,000
(6,000)
P 667,000
6. If SRs acquisition-date total fair value was P2,250,000, then a bargain purchase has
occurred.
SRs total fair value 1/1/09............................................................................ P2,250,000
Collective fair values of SRs net assets........................................................ P2,300,000
Bargain purchase..........................................................................................
P50,000
The acquisition method requires that the subsidiary assets acquired and liabilities
assumed be recognized at their acquisition date fair values regardless of the assessed fair
value. Therefore, none of SRs identifiable assets and liabilities would change as a result
of the assessed fair value. When a bargain purchase occurs, however, no goodwill is
recognized.
Problem XV (Full-Goodwill)
A variety of consolidated balances-midyear acquisition)
Book value of RR, 1/1 (stockholders' equity accounts)
(P100,000 + P600,000 + P700,000)...........
P1,400,000
Increase in book value:
Net Income (revenues less cost of
goods sold and expenses) .........................
P120,000
Dividends ................................................
(20,000)
Change during year .........................................
P100,000
Change during first six months of year .....
50,000
Book value of RR, 7/1 (acquisition date)
P1,450,000
(Full-Goodwill)
Consideration transferred by KL (P1,330,000 +
P30,000)................................................... P1,360,000
Non-controlling interest fair value .........................
300,000
RRs fair value (given)............................................ P1,630,000
Note: The fair value of subsidiary amounting P1,630,000, indicates a fair value of NCI
amounting to P300,000 (refer to above computation), which is lower compared to the
FV of the NCI based on FV of SHE of Subsidiary (RR), computed as follows:
BV of SHE of Subsidiary (RR).......................
P1,450,000
Adjustments to reflect fair value (undervaluation)
150,000
FV of SHE of Subsidiary (RR).......................
P 1,600,000
Multiplied by: NCI%........................
20%
FV of NCI.
P 320,000
Consideration transferred by KL (P1,330,000 +
P30,000)...................................................
Non-controlling interest fair value .........................
RRs fair value (given)............................................
Book value of RR, 7/1............................................
Fair value in excess of book value..........................
Excess fair value assigned
Trademarks ........................................................
Goodwill (full-goodwill) .......................................
Total
.............................................................
P1,360,000
___320,000
P1,680,000
(1,450,000)
P 230,000
Annual Excess
Life
Amortizations
150,000 5 years
P30,000
P
80,000 indefinite
-0P30,000
It should be carefully noted, that NCI can never be less than its share of fair value of
net identifiable assets (which is P320,000). Thus, the NCI share of company value is
raised to P320,000 (replacing the P300,000 NCI computed as residual amount refer
to computation above). The rationale behind such rule is to avoid having a lower
amount of goodwill under the full-goodwill approach as compared to goodwill
computed under the partial-goodwill approach.
(Partial-Goodwill)
Consideration transferred by KL............................. P 1,360,000
Less: Book value of SHE RR (P1,450,000 x 80%)..
1,160,000
Allocated excess.
P 200,000
Less: Over/under valuation of A and L:
P150,000 x 80%..............................................
120,000
Goodwill - partial.................................................. P
80,000
Note that the goodwill under the full-goodwill and partial-goodwill approach are the
same because the FV of the NCI based on the FV of SHE of subsidiary (P320,000) is
higher compared to the imputed or the computed residual amount of NCI (P300,000).
Consolidation Totals:
Expenses, P265,000 = P200,000 KK operating expenses plus P50,000 (postacquisition subsidiary operating expenses) plus year excess amortization of
P15,000.
Dividends paid = P80,000
Sales, P1,050,000 = P800,000 KK revenues plus P250,000 (post-acquisition
subsidiary revenue, P500,000 x 1/2)
Equipment, none
Depreciation expense, none
Subsidiarys net income, P60,000 = [(P500,000 P280,000 P100,000) x 1/2]
Buildings, none
Goodwill (full), P80,000; Goodwill (partial), P80,000
Consolidated Net Income, P245,000
Sales (1)
P1,050,000
(1)
(2)
P526,000
300,000
P826,000
(765,000)
P 61,000
Annual Excess
Life
Amortizations
(30,000) 5 years
P(6,000)
P 91,000 indefinite
-0P(6,000)
P(4,500)
P740,000
P100,000
25,000
P765,000
P 526,000
459,000
P 67,000
(P30,000 x 60%)...........................................
Goodwill - partial...................................
(2)
(4)
( 18,000)
P 85,000
P
720,000
420,000
120,000
P1,260,000
1,200,000
P
60,000
P
P
96,000
72,000
60,000
*the P720,000 is already the gross-up amount since it is the amount presented in the consolidated balance
sheet.
Because P Company continues to have the ability to control S Company, the sale of Ss
shares is treated as an equity transaction. Therefore, no gain or loss is recognized. Instead,
Palmer Companys additional paid-in capital increases by P60,000.
Problem XIX
P Companys additional paid-in capital arising sale of subsidiary shares is computed as
follows:
Problem XX
1. Equity Method
Income accrual (80%) ......................................................
Excess amortization expense ...........................................
Investment income .....................................................
P56,000
(3,200)
P52,800
P664,000
208,000
(36,000)
(9,600)
P826,400
2.
3.
4.
150,000
P
120,000
5.
If the parent has been applying the equity method, the stockholders' equity accounts
on its books will already represent consolidated totals. The common stock and additional
paid-in capital figures to be reported are the parent balances only.
Common stock, P500,000
Additional paid-in capital, P280,000
Problem XXI
(Consolidated balances three years after purchase. Parent has applied the equity method.)
1. Schedule 1Acquisition-Date Fair Value Allocation and Amortization
JJs acquisition-date fair value P206,000
Book value of JJ ....................................
(140,000)
Fair value in excess of book value ........
66,000
Excess fair value assigned to specific
accounts based on individual fair values
Equipment ......................................
Buildings (overvalued) ....................
Goodwill .........................................
Total ...............................................
54,400
(10,000)
P21,600
Life
8 yrs.
20 yrs.
indefinite
Annual Excess
Amortization
P6,800
(500)
-0P6,300
Investment in JJ Company12/31/x6
JJs acquisition-date fair value.................................................
20x4 Increase in book value of subsidiary
20x4 Excess amortizations (Schedule 1) ...............................
20x5 Increase in book value of subsidiary .............................
20x5 Excess amortizations (Schedule 1) ...............................
20x6 Increase in book value of subsidiary .............................
20x6 Excess amortizations (Schedule 1) ...............................
Investment in J Company .................................................
P206,000
40,000
(6,300)
20,000
(6,300)
10,000
(6,300)
P257,100
P30,000
(6,300)
P23,700
P414,000
(272,000)
(6,300)
P135,700
4. Consolidated Equipment
Book values added together ..................................................
Allocation of purchase price ...................................................
Excess depreciation (P6,800 3) ..........................................
Consolidated equipment ..................................................
P370,000
54,400
(20,400)
P404,000
5. Consolidated Buildings.......................................................................
Book values added together ..................................................
Allocation of purchase price ...................................................
Excess depreciation (P500 3) .............................................
Consolidated buildings......................................................
P288,000
(10,000)
1,500
P279,500
6. Consolidated goodwill
Allocation of excess fair value to goodwill..............................
P21,600
P290,000
P1,970,00
0
_1,440,00
0
P
530,000
P 100,000
140,000
P2,467,50
0
1,800,000
__240,000
P 290,000
P
662,500
P125,000
175,000
__300,000
P362,500
Amortization
Inventory: P125,000 x 60%
P125,000 x 40%
Equipment: P175,000 / 7 years
1.
20x4
Investment in S Company
Cash
20x4
P 75,000
25,000
P
100,000
1,970,000
120,000
Investment in S Company
600,000
20x5
P 50,000
25,000
P 75,000
1,970,000
120,000
600,000
80,000
80,000
180,000
180,000
720,000
720,000
Equity in Subsidiary Income
Investment in S Company
60,000
60,000
2.
20x4
(1) Equity in Subsidiary Income ((.80)(P750,000) -P80,000) 520,000
Dividends Declared (0.80 x P150,000)
Investment in S Company
400,000
(2) Beginning Retained Earnings - S Company
Common Stock- S Company
Investment in S Company
Noncontrolling Interest
(3) Inventory (P125,000 P75,000)
Cost of Goods Sold
Equipment (net)
Goodwill
Investment in S Company
(4)
Depreciation Expense
Equipment (net)
600,000
1,200,000
1,307,500
492,500
50,000
75,000
175,000
362,500
662,500
25,000
25,000
20x5
(1) Equity in Subsidiary Income ((.80)(P900,000) - P60,000) 660,000
Dividends Declared (0.80 x P225,000)
Investment in Superstition Company
(2) Beginning Retained Earnings-Superstition Company 1,200,000
Common Stock - Superstition Company.
1,200,000
Investment in Superstition Company
Non-controlling Interest
(P492,500 + (P1,200,000 P600,000) x .20)
(3) Investment in S Company
Non-controlling Interest
Cost of Goods Sold
Equipment (net)
Goodwill
120,000
60,000
15,000
50,000
175,000
362,500
180,000
480,000
1,787,500
612,500
Investment in S Company
662,500
20,000
5,000
25,000
50,000
3.
Consolidated Net Income for 20x5
Net income from own/separate operations
P Company (P1,000,000 P120,000)
P
880,000
__
750,000
P1,630,00
0
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess
Goodwill impairment
P130,000
100,000
____0
230,00
0
P1,400,00
0
130,000
P1,530,00
0
P 750,000
( 100,000)
P650,000
20
%
P 130,000
Note: Regardless on the method used in recording investments (cost model or equity
method) the manner of computing CI-CNI, NCI-CNI and CNI are exactly the same.
Problem XXIII
Requirements 1 to 4:
Schedule of Determination and Allocation of Excess (Partial-goodwill)
Date of Acquisition January 1, 20x4
Fair value of Subsidiary (80%)
Consideration
transferred..
Less: Book value of stockholders equity of S:
Common stock (P240,000 x 80%)
.
Retained earnings (P120,000 x 80%)
...
Allocated excess (excess of cost over book value)
..
Less: Over/under valuation of assets and liabilities:
Increase in inventory (P6,000 x 80%)
P 372,000
P 192,000
96,000
288,000
P
P 4,800
5,760
84,000
76,800
( 19,200)
3,840
72,000
P 12,000
P 24,000
S Co.
Fair value
P
(Over) Under
Valuation
30,000
6,000
Land
48,000
55,200
7,200
Equipment (net).........
84,000
180,000
96,000
(24,000)
Buildings (net)
168,000
144,000
Bonds payable
(120,000)
( 115,200)
4,800
Net..
P 204,000
P 294,000
P 90,000
The buildings and equipment will be further analyzed for consolidation purposes as follows:
Equipment ..................
Less: Accumulated
depreciation..
Net book
value...
Buildings................
Less: Accumulated
depreciation..
Net book
value...
S Co.
Book value
S Co.
Fair value
Increase
(Decrease)
180,000
180,000
96,000
( 96,000)
84,000
180,000
96,000
S Co.
Book value
S Co.
Fair value
(Decrease)
360,000
144,000
( 216,000)
192,000
( 192,000)
168,000
144,000
24,000)
Account
amortized
Adjustments
to
be
Over/
Under
Lif
e
Annual
Amount
Current
Year(20x4)
20x5
Inventory
P
6,000
P
6,000
P 6,000
P
-
12,000
12,000
12,000
( 6,000)
1,20
0
P
13,200
( 6,000)
1,200
(6,000)
1,20
0
P 13,200
P 7,200
96,000
(25,00
0)
4,80
0
The goodwill impairment loss of P3,125 based on 100% fair value would be allocated to the
controlling interest and the NCI based on the percentage of total goodwill each equity
interest received. For purposes of allocating the goodwill impairment loss, the full-goodwill is
computed as follows:
Fair value of Subsidiary (100%)
Consideration transferred: Cash (80%)
P 372,000
93,000
P 465,000
__360,000
105,000
90,000
P
15,000
In this case, the goodwill was proportional to the controlling interest of 80% and noncontrolling interest of 20% computed as follows:
Goodwill applicable to P
Goodwill applicable to NCI..
Total (full) goodwill..
Value
P12,000
3,000
P15,000
% of Total
80.00%
20.00%
100.00%
Value
P 3,000
% of Total
80.00%
750
20.00%
P 3,750
100.00%
January 1, 20x4:
(1) Investment in S Company
Cash.
.
372,000
372,000
Acquisition of S Company.
28,800
28,800
48,000
48,000
13,560
13,560
Thus, the investment balance and investment income in the books of P Company is as
follows:
Investment in S
Cost,
372,000
1/1/x4
28,800
80%)
NI of S
Dividends S (36,000x
Amortization &
(60,000
80%)
13,560
impairment
48,000
Investment Income
Balance,
377,640
Amortization &
13,560
12/31/x4
NI of S
impairment
48,000
34,440
(P60,000 x 80%)
Balance, 12/31/x4
240,000
120.000
288,000
72,000
(E2)
Inventory.
Accumulated depreciation equipment..
Accumulated depreciation buildings..
Land
.
Discount
on
bonds
payable.
Goodwill.
Buildings..
Non-controlling interest (P96,000 x 20%)
..
Investment in S Co.
6,000
96,000
192,000
7,200
4,800
12,000
216,000
18,000
84,000
6,000
6,000
6,000
1,200
3,000
6,000
12,000
1,200
3,000
Cost of
Goods
Sold
Inventory sold
Equipment
Buildings
Bonds payable
Totals
Depreciation/
Amortization
Expense
Amortizatio
n
-Interest
Total
P
6,000
_______
P 6,000
P 12,000
( 6,000)
_______
P 6,000
P 1,200
P1,200
13,20
0
It should be observed that the goodwill computed above was proportional to the controlling
interest of 80% and non-controlling interest of 20% computed as follows:
Value
P12,000
3,000
P15,000
% of Total
80.00%
20.00%
100.00%
Therefore, the goodwill impairment loss of P3,750 based on 100% fair value or full-goodwill
would be allocated as follows:
Value
P 3,000
% of Total
80.00%
625
20.00%
P 3,750
100.00%
34,440
7,200
36,000
5,640
Investment in S
NI of S
28,800
(60,000
Investment Income
Dividends - S
NI of S
Amortization
Amortization
impairment
13,560
(60,000
&
48,000
40
80%).
5,6
13,560
impairment
48,000
80%)
34,440
After the eliminating entries are posted in the investment account, it should be observed
that from consolidation point of view the investment account is totally eliminated. Thus,
Investment in S
Cost,
372,000
of goodwill
1/1/x4
28,800
80%)
NI of Son
48,000
Dividends S (36,000x
Amortization &
(60,000
Balance,
377,640
80%)
13,560
12/31/x4
288,000
84,000
5,640
impairment
377,640
377,640
amortization purposes:
Value
P12,000
3,000
P15,000
% of Total
80.00%
20.00%
100.00%
The goodwill impairment loss of P3,750 based on 100% fair value or fullgoodwill would be allocated as follows:
Value
P 3,000
% of Total
80.00%
750
_20.00%
P 3,750
100.00%
Percentage
for
(E5)
Non-controlling
interest
in
Subsidiary
Non-controlling interest ..
Net
Income
of
9,360
9,360
interest
P 60,000
( 13,200)
P 46,800
20%
P 9,360
Non-controlling
Subsidiary accounts are adjusted to full fair value regardless on the controlling interest
percentage or what option used to value non-controlling interest or goodwill.
Income Statement
P Co
P480,000
S Co.
P240,000
Investment income
Total Revenue
34,440
P513,600
P240,000
P204,000
P138,000
Depreciation expense
60,000
24,000
Interest expense
Other expenses
48,000
18,000
P312,000
P202,440
P180,000
P 60,000
P202,440
P 60,000
P360,000
S Company
Net income, from above
202,440
Dr.
(4)
34,440
(3)
6,000
(3)
6,000
(3)
1,200
(3)
3,000
(5)
9,360
Cr.
Consolidated
P 720,000
_________
P 720,000
P 348,000
90,000
1,200
66,000
3,000
P508,200
P211,800
( 9,360)
P202,440
P360,000
P120,000
60,000
(1)
120,000
202,440
Total
Dividends paid
P Company
S Company
Retained earnings, 12/31 to Balance
Sheet
P562,440
P180,000
P562,440
72,000
72,000
36,000
P490,440
P144,000
Cash.
Accounts receivable..
P
232,800
90,000
P 90,000
60,000
Inventory.
120,000
90,000
Land.
Equipment
210,000
240,000
48,000
180,000
Buildings
720,000
540,000
(4)
36,000
P490,440
Balance Sheet
Total
Accumulated depreciation
equipment
Accumulated depreciation
buildings
Accounts payable
Bonds payable
Common stock, P10 par
Common stock, P10 par
Retained earnings, from above
377,640
P1,990,440
P1,008,0
00
P 135,000
P 96,000
405,000
120,000
240,000
600,000
490,440
Non-controlling interest
_________
Total
(2)
6,000
(2)
7,200
(2)
4,800
(2)
12,000
P1,990,440
______
___
P1,008,0
00
(3)
6,000
210,000
265,200
420,000
(2)
216,000
(3)
1,200
(3)
3,000
(2)
288,000
(2)
84,000
(4)
5,640
1,044,000
3,600
9,000
P2,424,600
(2)
96,000
(8)
192,000
288,000 (9)
6,000
120,000
120,000
240,000
144,000
322,800
150,000
(3)
12,000
P147,000
495,000
240,000
360,000
600,000
(1)
240,000
490,440
(1 )
72,000 (2)
(10) 7,200 18,000
(5)
__________
9,360
P
P
751,200
751,200
____92,160
P2,424,600
P Co.
P 540,000
216,000
P 324,000
60,000
72,000
P 192,000
66,240
S Co.
P 360,000
192,000
P 168,000
24,000
54,000
P 90,000
-
Net income
Dividends paid
P 258,240
P 72,000
P 90,000
P 48,000
38,400
38,400
72,000
72,000
5,760
5,760
Thus, the investment balance and investment income in the books of P Company is as
follows:
Investment in S
Cost,
377,640
1/1/x5
38,400
80%)
NI of S
Dividends S (48,000x
Amortization
(90,000
80%)
5,760
(P7,200 x 80%)
72,000
Investment Income
Balance,
405,480
Amortization
5,760
12/31/x5
NI of S
(7,200
80%)
72,000
66,240
(90,000 x 80%)
Balance, 12/31/x4
The schedule of determination and allocation of excess presented above provides complete
guidance for the worksheet eliminating entries:
240,000
144.000
307,200
76,800
84,000
198,000
7,200
3,600
9,000
216,000
15,360
70,440
remainder
Depreciation/
Amortization
Expense
Inventory
sold
Equipment
P 12,000
Amortizatio
n
-Interest
Total
6,000
6,000
1,200
12,000
1,200
Buildings
Bonds
payable
Totals
( 6,000)
_______
P 1,200
P 6,000
P1,200
P7,,20
0
66,240
9,600
48,000
27,840
under
Investment in S
NI of S
38,400
(90,000
x
Investment Income
Dividends S
Amortization
80%).
72,000
27,8
5,760
80%)
(P7,200 x
NI of S
Amortization
(P7,200
5,760
(90,000
x
80%)
72,000
80%)
66,240
40
After the eliminating entries are posted in the investment account, it should be observed
that from consolidation point of view the investment account is totally eliminated. Thus,
Investment in S
Cost,
377,640
NI of S
(E5)
Non-controlling
interest
in
Subsidiary
Non-controlling interest ..
1/1/x5
38,400
80%)
Net
Income
Dividends S (48,000x
of Amortization
16,560
16,560
To establish non-controlling
interest in subsidiarys
(90,000
x
80%) adjusted
5,760 net
income 72,000
for 20x4 as follows:
Balance,
12/31/x5
Net 405,480
income of subsidiary..
Amortization of allocated excess [(E3)]...
Multiplied by:
%..........
Non-controlling
(NCINI)
Non-controlling
interest
(7,200 x 80%)
307,200
P 90,000
( 7,200)
P 82,800
20%
70,440
P 16,560
27,840
405,480
405,480
Income Statement
P Co
P540,000
S Co.
P360,000
Investment income
Total Revenue
Cost of goods sold
66,240
P606,000
P216,000
P360,000
P192,000
60,000
24,000
Interest expense
Other expenses
Goodwill impairment loss
Total Cost and Expenses
72,000
P348,000
Net Income
P258,240
54,000
P270,000
P
90,000
Depreciation expense
Dr.
(4)
66,240
Cr.
Consolidated
P 900,000
___________
P
P
(3)
6,000
(3)
1,200
900,000
408,000
90,000
1,200
126,000
P 625,200
P 274,800
(5)
16,560
( 16,560)
P258,240
P490,440
S Company
Net income, from above
Total
Dividends paid
P Company
S Company
Retained earnings, 12/31 to Balance
Sheet
258,240
P748,680
P
90,000
P258,240
P490,440
P144,000
90,000
P234,000
(1)
144,000
258,240
P748,680
72,000
72,000
(4)
48,000
48,000
P676,680
P186,000
P676,680
Cash.
Accounts receivable..
Inventory.
P
265,200
180,000
216,000
P
102,000
96,000
108,000
P 367,200
276,000
324,000
Land.
Equipment
210,000
240,000
48,000
180,000
Buildings
720,000
540,000
Balance Sheet
(2)
3,600
(2)
9,000
Total
Accumulated depreciation
equipment
Accumulated depreciation
buildings
Accounts payable
Bonds payable
Common stock, P10 par
Common stock, P10 par
Retained earnings, from above
405,480
P2,236,680
P1,074,0
00
P 150,000
P
102,000
450,000
306,000
120,000
240,000
600,000
120,000
120,000
676,680
P2,236,680
(3)
216,000
(3)
1,200
240,000
186,000
______
___
P1,074,0
00
1,044,000
2,400
9,000
P2,707,800
(2)
84,000
(3)
12,000
(2)
198,000
(3)
6,000
P180,000
552,000
240,000
360,000
600,000
(1)
240,000
676,680
(7)
___
_____
265,200
420,000
(1)
307,200
(2) 70,440
(4)
27,840
Non-controlling interest
Total
(2)
7,200
9,600
__________
P
794,400
(2 )
76,800 (2)
15,360
(5)
16,560
P
794,400
____99,120
P2,707,800
Note: Using cost model or equity method, the consolidated net income, consolidated
retained earnings, non-controlling interests, consolidated equity on December 31, 20x4 and
20x5 are exactly the same (refer to Problem VI solution).
5. 1/1/20x4
a. On date of acquisition the retained earnings of parent should always be considered as
the consolidated retained earnings, thus:
Consolidated Retained Earnings, January 1, 20x4
Retained earnings - P Company, January 1, 20x4 (date of acquisition)
P360,000
b.
Non-controlling interest (partial-goodwill), January 1, 20x4
P 240,000
Common stock S Company, January 1, 20x4
Retained earnings S Company, January 1, 20x4
Stockholders equity S Company, January 1, 20x4
Adjustments to reflect fair value - (over) undervaluation of assets and
liabilities, date of acquisition (January 1, 20x4)
Fair value of stockholders equity of subsidiary, January 1, 20x4
Multiplied by: Non-controlling Interest percentage...
Non-controlling interest (partial-goodwill)..
120,000
P 360,000
90,000
P450,000
20
P 90,000
c.
Consolidated SHE:
Stockholders Equity
Common stock, P10 par
Retained earnings
Parents Stockholders Equity / CI - SHE
NCI, 1/1/20x4
Consolidated SHE, 1/1/20x4
P 600,000
360,000
P 960,000
___90,000
P1,050,000
6.
12/31/20x4:
a. CI-CNI
Consolidated Net Income for 20x4
Net income from own/separate operations
P Company
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess (refer to amortization above)
Goodwill impairment (impairment under partial-goodwill approach)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of P..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20x4
P168,000
60,000
P228,000
P 9,360
13,200
3,000
25,560
P202,440
9,360
P211.800
b. NCI-CNI
*Non-controlling Interest in Net Income (NCINI) for 20x4
Net income of S Company
Less: Amortization of allocated excess / goodwill impairment
(refer to amortization table above)
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI)
P 60,000
13,200
P 46,800
20%
P 9,360
P360,000
202,440
P562,440
72,000
P490,440
e.
Non-controlling interest (partial-goodwill), December 31, 20x4
P 240,000
Common stock S Company, December 31, 20x4
Retained earnings S Company, December 31, 20x4
Retained earnings S Company, January 1, 20x4
Add: Net income of S for 20x4
Total
Less: Dividends paid 20x4
Stockholders equity S Company, December 31, 20x4
Adjustments to reflect fair value - (over) undervaluation of assets and
liabilities, date of acquisition (January 1, 20x4)
Amortization of allocated excess (refer to amortization above) 20x4
Fair value of stockholders equity of subsidiary, December 31, 20x4
Multiplied by: Non-controlling Interest percentage...
Non-controlling interest (partial-goodwill)..
P120,000
60,000
P180,000
36,000
144,000
P 384,000
90,000
( 13,200)
P460,000
20
P 92,160
f.
Consolidated SHE:
Stockholders Equity
Common stock, P10 par
Retained earnings
P 600,000
490,440
P1,090,440
___92,160
P1,182,600
12/31/20x5:
a. CI-CNI
Consolidated Net Income for 20x5
Net income from own/separate operations:
P Company
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess (refer to amortization above)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20x5
P192,000
90,000
P282,000
P16,560
__7,200
23,760
P258,240
16,560
P274,800
b. NCI-CNI
*Non-controlling Interest in Net Income (NCINI) for 20x5
Net income of S Company
Less: Amortization of allocated excess / goodwill impairment for 20x5
(refer to amortization table above)
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI) for 20x5
P 90,000
80,400
P 82,800
20%
P 16,560
P484,800
P 144,000
120,000
P 24,000
13,200
P
10,800
80%
P
8,640
3,000
5,640
P 490,440
attributable to
equity holders of parent for 20x5
Total
Less: Dividends paid P Company for 20x5
Consolidated Retained Earnings, December 31, 20x5
258,240
P748,680
72,000
P676,680
*this procedure would be more appropriate, instead of multiplying the full-goodwill impairment loss of
P3,750 by 80%. There might be situations where the controlling interests on goodwill impairment loss would
not be proportionate to NCI acquired.
e.
Non-controlling interest (partial-goodwill), December 31, 20x5
P 240,000
Common stock S Company, December 31, 20x5
Retained earnings S Company, December 31, 20x5
Retained earnings S Company, January 1, 20x5
Add: Net income of S for 20x5
Total
Less: Dividends paid 20x5
Stockholders equity S Company, December 31, 20x5
Adjustments to reflect fair value - (over) undervaluation of assets and
liabilities, date of acquisition (January 1, 20x4)
Amortization of allocated excess (refer to amortization above) :
20x4
20x5
Fair value of stockholders equity of subsidiary, December 31, 20x5
Multiplied by: Non-controlling Interest percentage...
Non-controlling interest (partial goodwill)..
P14,000
90,000
P234,000
48,000
186,000
P 426,000
90,000
P
13,200
7,200
( 20,400)
P 495,600
20
P 99,120
f.
Consolidated SHE:
Stockholders Equity
Common stock, P10 par
Retained earnings
Ps Stockholders Equity / CI SHE, 12/31/20x4
NCI, 12/31/20x4
Consolidated SHE, 12/31/20x4
P 600,000
676,680
P1,276,680
___99,120
P1,1375,80
0
Problem XXIV
Requirements 1 to 4:
Schedule of Determination and Allocation of Excess
Date of Acquisition January 1, 20x4
Fair value of Subsidiary (80%)
Consideration transferred (80%)..
Fair value of NCI (given) (20%)..
Fair value of Subsidiary (100%).
Less: Book value of stockholders equity of Son:
Common stock (P240,000 x 100%)
P 372,000
93,000
P 465,000
P 240,000
.
Retained earnings (P120,000 x 100%)...
Allocated excess (excess of cost over book value)
..
Less: Over/under valuation of assets and liabilities:
Increase in inventory (P6,000 x 100%)
120,000
360,000
P 105,000
6,000
7,200
96,000
( 24,000)
4,800
90,000
P 15,000
Adjustments
to
be
Inventory
Subject to Annual Amortization
Equipment (net).........
Buildings (net)
Bonds payable
Over/
under
P
6,000
96,000
(24,00
0)
4,80
0
Lif
e
Current
Year(20x4)
Annual
Amount
P
6,000
P 6,000
P
-
12,000
12,000
12,000
( 6,000)
1,20
0
P
13,200
( 6,000)
1,200
(6,000)
1,20
0
P 13,200
P 7,200
20x5
January 1, 20x4:
(1) Investment in S Company
Cash.
.
372,000
372,000
Acquisition of S Company.
28,800
28,800
48,000
48,000
13,560
13,560
Thus, the investment balance and investment income in the books of P Company is as
follows:
Investment in S
Cost,
372,000
1/1/x4
28,800
80%)
NI of S
48,000
Dividends S (36,000x
Amortization &
(60,000
80%)
13,560
Impairment
Investment Income
Balance,
377,640
Amortization
&
12/31/x4
NI of S
Impairment
48,000
(P60,000 x 80%)
13,560
34,440
Balance, 12/31/x4
240,000
120.000
288,000
72,000
(E2)
Inventory.
Accumulated depreciation equipment..
Accumulated depreciation buildings..
Land
.
Discount
on
bonds
payable.
Goodwill.
Buildings..
Non-controlling interest (P90,000 x 20%) + [(P15,000,
full
P12,000, partial goodwill)]
Investment in S Co.
6,000
96,000
192,000
7,200
4,800
15,000
216,000
21,000
84,000
Cost of
Goods
Sold
Inventory sold
Equipment
Buildings
Bonds payable
Totals
Depreciation/
Amortization
Expense
Amortizatio
n
-Interest
Total
P
6,000
_______
P 6,000
P 12,000
( 6,000)
_______
P 6,000
P 1,200
P1,200
13,20
0
6,000
6,000
6,000
1,200
3,750
6,000
12,000
1,200
3,750
It should be observed that the goodwill computed above was proportional to the controlling
interest of 80% and non-controlling interest of 20% computed as follows:
Value
P12,000
3,000
P15,000
% of Total
80.00%
20.00%
100.00%
Therefore, the goodwill impairment loss of P3,125 based on 100% fair value or full-goodwill
would be allocated as follows:
Value
P 3,000
% of Total
80.00%
750
20.00%
P 3,750
100.00%
37,440
7,200
36,000
8,640
Investment in S
NI of S
28,800
(60,000
Investment Income
Dividends S
NI of Son
Amortization
Amortization &
Impairment
13,560
(60,000
&
48,000
40
80%).
5,6
13,560
Impairment
48,000
80%)
34,440
After the eliminating entries are posted in the investment account, it should be observed
that from consolidation point of view the investment account is totally eliminated. Thus,
Investment in S
Cost,
372,000
1/1/x4
28,800
80%)
NI of S
40,000
Dividends S (36,000x
Amortization &
(60,000
Balance,
377,640
80%)
13,560
12/31/x4
288,000
Impairment
of goodwill
84,000
5,640
377,640
377,640
amortization purposes:
Value
P12,000
3,000
P15,000
% of Total
80.00%
20.00%
100.00%
The goodwill impairment loss of P3,750 based on 100% fair value or fullgoodwill would be allocated as follows:
Value
P 3,000
% of Total
80.00%
750
_20.00%
P 3,750
100.00%
(E5)
Non-controlling
interest
in
Subsidiary
Non-controlling interest ..
Net
Income
of
8,610
8,610
P 60,000
( 13,200)
P 46,800
20%
P
9,360
750
P
8,610
Subsidiary accounts are adjusted to full fair value regardless on the controlling interest
percentage or what option used to value non-controlling interest or goodwill.
Income Statement
P Co
P480,000
S Co.
P240,000
Investment income
Total Revenue
34,440
P514,440
P240,000
P204,000
P138,000
Depreciation expense
60,000
24,000
Interest expense
Other expenses
Goodwill impairment loss
48,000
-
18,000
-
Dr.
(4)
34,440
(3)
6,000
(3)
6,000
(3)
1,200
(3)
Cr.
Consolidated
P 720,000
_________
P 720,000
P 348,000
90,000
1,200
66,000
3,750
3,750
Total Cost and Expenses
Net Income
P312,000
P202,440
P180,000
P 60,000
P202,440
P 60,000
P360,000
S Company
Net income, from above
Total
Dividends paid
P Company
S Company
Retained earnings, 12/31 to Balance
Sheet
202,440
P562,440
P508,950
P211,050
( 8,610)
(5)
8,610
P202,440
P360,000
P120,000
60,000
P180,000
(1)
120,000
202,440
P562,440
72,000
72,000
36,000
P490,440
P144,000
Cash.
Accounts receivable..
P
232,800
90,000
P 90,000
60,000
Inventory.
120,000
90,000
Land.
Equipment
210,000
240,000
48,000
180,000
Buildings
720,000
540,000
(4)
36,000
P490,440
Balance Sheet
Total
Accumulated depreciation
equipment
Accumulated depreciation
buildings
Accounts payable
Bonds payable
Common stock, P10 par
Common stock, P10 par
Retained earnings, from above
377,640
P1,990,440
P1,008,0
00
P 135,000
P 96,000
405,000
120,000
240,000
600,000
490,440
240,000
144,000
_________
P1,990,440
______
___
P1,008,0
00
(3)
6,000
322,800
150,000
210,000
265,200
420,000
(2)
216,000
(3)
1,200
(3)
3,750
(2)
288,000
(2)
84,000
(4)
5,640
1,044,000
3,600
11,250
P2,426,850
(2)
96,000
(2)
192,000
288,000 (3)
6,000
120,000
120,000
Non-controlling interest
Total
(2)
6,000
(2)
7,200
(2)
4,800
(2)
15,000
(3)
12,000
P147,000
495,000
240,000
360,000
600,000
(1)
240,000
490,440
(1 )
72,000 (2)
(4) 7,200 21,000
(5)
__________
8,610
P
P
754,200
754,200
____94,410
P2,426,850
P Co.
P 540,000
216,000
P 324,000
60,000
72,000
P 192,000
66,240
P 258,240
P 72,000
S Co.
P 380,000
192,000
P 168,000
24,000
54,000
P 90,000
P 90,000
P 48,000
38,400
38,400
72,000
72,000
5,760
5,760
P Companys P12,000 portion of the differential related to goodwill related to goodwill is not
adjusted on the parents books following Option 2 as referred to above for goodwill
impairment loss. Even though the goodwill of the consolidated entity is impaired,
Thus, the investment balance and investment income in the books of P Company is as
follows:
Investment in S
Cost,
377,640
1/1/x5
38,400
80%)
NI of S
Amortization
(90,000
72,000
Amortization
Balance,
405,480
5,760
Dividends S (48,000x
80%)
5,760
Investment Income
NI of S
12/31/x5
(7,200
80%)
(P7,200 x 80%)
72,000
66,240
(90,000 x 80%)
Balance, 12/31/x4
240,000
144.000
307,200
76,800
84,000
198,000
7,200
3,600
11,250
216,000
17,610
Investment in S Co.
70,440
of
remainder
6,000
6,000
1,200
12,000
1,200
Depreciation/
Amortization
Expense
Inventory
sold
Equipment
Buildings
Bonds
payable
Totals
Amortizatio
n
-Interest
P 12,000
( 6,000)
_______
P 1,200
P 6,000
P1,200
Total
P7,20
0
66,240
9,600
48,000
27,840
under
Investment in S
NI of S
38,400
(90,000
72,000
40
Investment Income
Dividends - S
Amortization
80%).
27,8
5,760
80%)
(P7,200 x
NI of S
Amortization
(P7,200
5,760
(90,000
x
80%)
72,000
80%)
66,240
After the eliminating entries are posted in the investment account, it should be observed
that from consolidation point of view the investment account is totally eliminated. Thus,
Investment in S
Cost,
377,640
1/1/x5
38,400
80%)
Dividends S (48,000x
NI of S
72,000
Amortization
(90,000
(E5)
Non-controlling
interest
in
Subsidiary
Non-controlling interest ..
80%)
Net
5,760
(7,200 x 80%)
Income
of
16,560
16,560
Balance,
12/31/x5 adjusted
307,200 net
To establish
non-controlling interest in subsidiarys
income 405,480
for 20x5 as follows:
70,440
Net income of subsidiary..
Amortization of allocated excess [(E3)]...
Multiplied by:
Non-controlling interest
%..........
Non-controlling
Interest in Net Income
(NCINI)
Less: NCI on goodwill impairment loss on
full405,480
Goodwill
Non-controlling
Interest in Net Income
(NCINI)
P 90,000
( 7,200)
P 82,800
27,840
20%
P 16,560
0
405,480
P 16,560
Income Statement
P Co
P540,000
S Co.
P360,000
Investment income
Total Revenue
Cost of goods sold
66,240
P606,000
P216,000
P360,000
P192,000
60,000
24,000
Depreciation expense
Dr.
(4)
66,240
Cr.
Consolidated
P 900,000
___________
P
P
(3)
6,000
900,000
408,000
90,000
Interest expense
Other expenses
Goodwill impairment loss
Total Cost and Expenses
72,000
P348,000
Net Income
P258,240
P258,240
P490,440
S Company
Net income, from above
Total
Dividends paid
P Company
S Company
Retained earnings, 12/31 to Balance
Sheet
258,240
P748,680
54,000
P270,000
P
90,000
P
90,000
(3)
1,200
1,200
P
P
(5)
16,560
126,000
625,200
274,800
( 16,560)
P 258,240
P490,440
P144,000
90,000
P234,000
(1)
144,000
258,240
P748,680
72,000
72,000
(4)
48,000
48,000
P676,680
P186,000
P676,680
Cash.
Accounts receivable..
Inventory.
P
265,200
180,000
216,000
P
102,000
960,000
108,000
P 367,200
276,000
324,000
Land.
Equipment
210,000
240,000
48,000
180,000
Buildings
720,000
540,000
Balance Sheet
(2)
3,600
(2)
11,250
Total
Accumulated depreciation
equipment
Accumulated depreciation
buildings
Accounts payable
Bonds payable
Common stock, P10 par
Common stock, P10 par
Retained earnings, from above
(2)
7,200
405,9480
P2,236,680
P 150,000
P
102,000
450,000
306,000
120,000
240,000
600,000
120,000
120,000
240,000
186,000
Non-controlling interest
_________
_
1,044,000
2,400
11,250
P2,634,000
(2)
84,000
(3)
12,000
(2)
198,000
(3)
6,000
P 180,000
552,000
240,000
360,000
600,000
(1)
240,000
676,680
(3)
9,600
___
_____
(3)
216,000
(3)
1,200
(1)
307,200
(5) 70,440
(4)
27,840
P1,074,0
00
676,680
265,200
420,000
__________
(2 )
76,800
(2)
17,610
(5)
16,560
__________
Total
P2,236,680
P1,074,0
00
P
796,650
P
796,650
P2,634,000
Note: Using cost model or equity method, the consolidated net income, consolidated
retained earnings, non-controlling interests, consolidated equity on December 31, 20x4 and
20x5 are exactly the same (refer to Problem VII solution).
5. 1/1/20x4
a. On date of acquisition the retained earnings of parent should always be considered as
the consolidated retained earnings, thus:
Consolidated Retained Earnings, January 1, 20x4
Retained earnings - P Company, January 1, 20x4 (date of acquisition)
P360,000
b.
Non-controlling interest (full-goodwill), January 1, 20x4
P 240,000
Common stock S Company, January 1, 20x4
Retained earnings S Company, January 1, 20x4
Stockholders equity S Company, January 1, 20x4
Adjustments to reflect fair value - (over) undervaluation of assets and
liabilities, date of acquisition (January 1, 20x4)
Fair value of stockholders equity of subsidiary, January 1, 20x4
Multiplied by: Non-controlling Interest percentage...
Non-controlling interest (partial-goodwill)..
Add: NCI on full-goodwill (P15,000 P12,000)
Non-controlling interest (partial-goodwill)..
120,000
P 360,000
90,000
P450,000
20
P 90,000
___3,000
P 93,000
c.
Consolidated SHE:
Stockholders Equity
Common stock, P10 par
Retained earnings
Parents Stockholders Equity / CI - SHE
NCI, 1/1/20x4
Consolidated SHE, 1/1/20x4
P 600,000
360,000
P 960,000
___93,000
P1,053,000
6.
a. CI-CNI P202,440
Consolidated Net Income for 20x4
Net income from own/separate operations:
P Company
P168,000
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess (refer to amortization above)
Goodwill impairment (impairment under full-goodwill approach)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20x4
60,000
P228,000
P 8,610
13,200
3,750
25,560
P202,440
8,610
P211.050
b. NCI-CNI P8,610
*Non-controlling Interest in Net Income (NCINI) for 20x4
Net income of S Company
Less: Amortization of allocated excess (refer to amortization table above)
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI)
Less: Non-controlling interest on impairment loss on full-goodwill (P3,750
x 20%)
or (P3,750 impairment on full-goodwill less P3,000, impairment on
partial-goodwill)*
Non-controlling Interest in Net Income (NCINI)
P 60,000
13,200
P 46,800
20%
P
9,360
750
P 8,610
*this procedure would be more appropriate, instead of multiplying the full-goodwill impairment
loss of P3,750 by 20%. There might be situations where the NCI on goodwill impairment loss
would not be proportionate to NCI acquired.
P360,000
202,440
P562,440
72,000
P490,440
e.
Non-controlling interest (full-goodwill), December 31, 20x4
P 240,000
Common stock S Company, December 31, 20x4
Retained earnings S Company, December 31, 20x4
Retained earnings SCompany, January 1, 20x4
Add: Net income of S for 20x4
Total
Less: Dividends paid 20x4
P120,000
60,000
P180,000
36,000
144,000
P 384,000
90,000
( 13,200)
P460,800
20
P 92,160
2,250
P 94,410
f.
Consolidated SHE:
Stockholders Equity
Common stock, P10 par
Retained earnings
Ps Stockholders Equity / CI SHE, 12/31/20x4
NCI, 12/31/20x4
Consolidated SHE, 12/31/20x4
P 600,000
490,440
P1,090,440
___94,410
P1,184,850
12/31/20x5:
a. CI-CNI P258,240
Consolidated Net Income for 20x5
Net income from own/separate operations
P Company
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess (refer to amortization above)
Goodwill impairment (impairment under full-goodwill approach)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
Add: Non-controlling Interest in Net Income (NCINI)
Consolidated Net Income for 20x5
P192,000
90,000
P282,000
P16,560
7,200
0
P258,240
16,560
P274,800
b. NCI-CNI P16,560
*Non-controlling Interest in Net Income (NCINI) for 20x5
Net income of S Company
Less: Amortization of allocated excess / goodwill impairment for 20x5
(refer to amortization table above)
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI) for 20x5
23,760
P 90,000
80,400
P 82,800
20%
P 16,560
or
P484,800
P 144,000
120,000
P 24,000
13,200
P
10,800
80%
P
8,640
3,000
5,640
P 490,440
258,240
P748,680
72,000
P676,680
*this procedure would be more appropriate, instead of multiplying the full-goodwill impairment loss of
P3,750 by 80%. There might be situations where the controlling interests on goodwill impairment loss would
not be proportionate to NCI acquired.
e.
Non-controlling interest (full-goodwill), December 31, 20x5
P 240,000
Common stock S Company, December 31, 20x5
Retained earnings S Company, December 31, 20x5
Retained earnings S Company, January 1, 20x5
Add: Net income of S for 20x5
Total
Less: Dividends paid 20x5
Stockholders equity S Company, December 31, 20x5
Adjustments to reflect fair value - (over) undervaluation of assets and
liabilities, date of acquisition (January 1, 20x4)
Amortization of allocated excess (refer to amortization above) :
20x4
20x5
Fair value of stockholders equity of subsidiary, December 31, 20x5
Multiplied by: Non-controlling Interest percentage...
Non-controlling interest (partial goodwill)..
Add: Non-controlling interest on full goodwill , net of impairment loss
[(P15,000 full P12,000, partial = P3,000) P750 impairment loss
P144,000
90,000
P234,000
48,000
186,000
P 426,000
90,000
P
13,200
7,200
( 20,400)
P 495,600
20
P 99,120
2,250
P 101,370
f.
Consolidated SHE:
Stockholders Equity
Common stock, P10 par
Retained earnings
Ps Stockholders Equity / CI SHE, 12/31/20x4
NCI, 12/31/20x4
Consolidated SHE, 12/31/20x4
P 600,000
676,680
P1,276,680
__101,370
P1,378,050
Problem XXV
1. Ambrose should report income from its subsidiary of P15,000 (P20,000 x .75) rather than
dividend income of P9,000.
2. A total of P5,000 (P20,000 x .25) should be assigned to the noncontrolling interest in the
20x4 consolidated income statement.
3. Consolidated net income of P70,0000 should be reported for 20X4, computed as follows:
Reported net income of AA
P59,000
Less: Dividend income from KR
(9,000)
Operating income of AA
P50,000
Net income of KR
20,000
Consolidated net income
P70,000
4. Income of P79,000 would be attained by adding the income reported by AA (P59,000) to
the income reported by KR (P20,000). However, the dividend income from KR recorded
by AA must be excluded from consolidated net income.
Problem XXVI
(Determine consolidated balances for a step acquisition).
1. AD fair value implied by price paid by MM
P560,000 70% =
P800,000
2. Revaluation gain
1/1 equity investment in AD (book value)
25% income for 1st 6 months
Investment book value at 6/30
Fair value of investment
Gain on revaluation to fair value
P178,000
8,750
186,750
200,000
P13,250
3. Goodwill at 12/31
Fair value of AD at 6/30
Book value at 6/30 (700,000 + [70,000 2])
Excess fair value
Allocation to goodwill (no impairment)
P800,000
735,000
P65,000
P65,000
4. Non-controlling interest
5% fair value balance at 6/30
P40,000
1,750
(1,000)
P40,750
5. b
6.
7.
8.
9.
10.
p
19,000
( 14,000)
P 5,000
BV of building, 1/1/20x4
P200,000
Adjustments to reflect fair value, 1/1/20x4 (P300,000 P200,000) 100,000
Depreciation 1/1/20x4 12/31/20x6 (P100,000/20 x 3 years)
( 15,000)
P285,000
d same with No. 5
d
BV of equipment, 1/1/20x4
P 80,000
Adjustments to reflect fair value, 1/1/20x4 (P80,000 P75,000) ( 5,000)
Depreciation 1/1/20x4 12/31/20x6 (P5,000/10 x 3 years)
1,500
P 76,500
a
Adjustments to reflect fair value, 1/1/20x4 (P80,000 P75,000) (P 5,000)
Depreciation 1/1/20x4 12/31/20x6 (P5,000/10 x 3 years)
1,500
(P 3,500)
d 1/2/20x4:
BV of equipment, 1/1/20x4
P200,000
Adjustments to reflect fair value, 1/1/20x4 (P300,000 P200,000)
100,000
P300,000
a
Net income of S (5/1/x5 12/31/x5): P840,000 x 8/12
P560,000
Less: Dividend S (11/1/20x5 no need to pro-rate)
300,000
Cumulative net income less dividends since
date of acquisition, 1/1/20x6 (date to establish reciprocity
not 12/31/x6)
P260,000
x: Controlling interests
80%
P208,000
11. a
Net income of S (5/1/x5 12/31/x5): P210,000 x 8/12
Less: Dividend S (11/1/20x5 no need to pro-rate)
Cumulative net income less dividends since
date of acquisition, 12/31/20x5 (date to establish reciprocity
not or 1/1/20x6)
x: Controlling interests
P140,000
75,000
P 65,000
80%
P 52,000
12. b
Retained earnings S Company, 1/1/20x4
Less: Retained earnings S Company, 12/31/20x4
Cumulative net income less dividends since
date of acquisition, 1/1/20x6 (date to establish reciprocity
should always be beginning of the year, not 12/31/x6)
x: Controlling interests
P120,000
380,000
P260,000
90%
P234,000
13. b
P 60,000
190,000
P130,000
90%
P117,000
14. a
Non-controlling Interest in Net Income (NCINI) for Year 3
Net income of S Company
Less: Amortization of allocated excess
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI) for Year 3
P240,000
45,000
P195,000
30%
P 58,500
15. c
Net income from own/separate operations
P Company
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess (refer to amortization above)
Goodwill impairment (impairment under full-goodwill approach)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
P 375,000
30,000
P405,000
P5,250
3,750
0
9,000
P396,000
P30,000
3,750
P26,250
Multiplied by: Non-controlling interest %..........
20%
Non-controlling Interest in Net Income (NCINI) for 20x4
P 5,250
**P270,000/80% = P337,500 (P150,000 + P150,000) = P37,500 / 10 years = P3,750
Note: Whether the partial or full-goodwill approach are used the amortization of excess are
always the same.
16. a
*Non-controlling Interest in Net Income (NCINI) for Year 3
Net income of S Company
Less: Amortization of allocated excess
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI) for Year 3
P600,000
112,500
P487,500
30%
P146,250
17. c
Net income from own/separate operations
P Company
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess (refer to amortization above)
Goodwill impairment (impairment under full-goodwill approach)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
P 625,000
50,000
P675,000
P 8,750
6,250
0
15,000
P660,000
P50,000
6,250
P43,750
Multiplied by: Non-controlling interest %..........
20%
Non-controlling Interest in Net Income (NCINI) for 20x4
P 8,750
**P450,000/80% = P562,500 (P250,000 + P250,000) = P62,500 / 10 years = P6,250
Note: Whether the partial or full-goodwill approach are used the amortization of excess are
always the same.
18. b
As a general rule, if problem is silent It is assumed that expenses are generated evenly
throughout the year, thus:
Expenses (9/1/20x4-12/31/20x4): P620,000 x 4/12
P206,667
Amortization of allocated excess: P15,000 x 4/12
5,000
P211,667
19. c
Net income of S Company (P800,000 P620,000)
Less: Amortization of allocated excess
Multiplied by: No of mos. (9/1-12/31)
P180,000
15,000
P165,000
4/12
P 55,000
20. a
Net income of S Company (P800,000 P620,000)
Less: Amortization of allocated excess
Multiplied by: No of mos. (9/1-12/31)
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI) for 20x4
P180,000
15,000
P165,000
4/12
P 55,000
____20%
P 22,000
21. d
Net income from own/separate operations
P Company
S Company
Total
Less: Non-controlling Interest in Net Income*
Amortization of allocated excess (refer to amortization above)
Goodwill impairment (impairment under full-goodwill approach)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
*Non-controlling Interest in Net Income (NCINI) for 20x4
Net income of S Company
Less: Amortization of allocated excess**
Multiplied by: Non-controlling interest %..........
Non-controlling Interest in Net Income (NCINI) for 20x4
**P420,000/60% = P700,000 P560,000 = P140,000 P140,000 = P0
Amortization: P140,000/10 years = P14,000
P 560,000
140,000
P700,000
P 50,400
14,000
_
0
64,400
P635,600
P140,000
14,000
P126,000
40%
P 50,400
Note: Whether the partial or full-goodwill approach are used the amortization of excess are
always the same.
22. a
NCI-CNI: P50,400 (refer to No. 21)
Non-controlling interest (full-goodwill), December 31, Year 2
P 300,000
Common stock S Company, December 31, Year 2
Retained earnings S Company, December 31, 20x5
Retained earnings S Company, January 1, Year 2
Add: Net income of S for Year 2
Total
Less: Dividends paid Year 2
P260,000
140,00
0
P400,000
400,000
0
P 700,000
140,000
P 14,000
14,00
0
( 28,000)
P 812,000
40
%
P 324,800
23. c
Book value equipment Parent, 12/31/Year 2
P444,000
P200,000
140,000
( 28,000
)
312,000
P756,000
24. b
Full-Goodwill: (P600,000/70%) P640,000 = P217,143 P40,000 = P177,143
If partial goodwill: P600,000 (P640,000 x 70%) = P152,000 (P40,000 x 70%) =
P124,000
25. c
26. d - The acquisition method consolidates assets at fair value at acquisition date
regardless of the parents percentage ownership.
27. d - In consolidating the subsidiary's figures, all intercompany balances must be
eliminated in their entirety for external reporting purposes. Even though the subsidiary
is less than fully owned, the parent nonetheless controls it.
28. c - An asset acquired in a business combination is initially valued at 100% acquisitiondate fair value and subsequently amortized its useful life.
Patent fair value at January 1, 20x4.........................................................
Amortization for 2 years (10 year life).....................................................
Patent reported amount December 31, 20x5...........................................
P45,000
(9,000)
P36,000
29. c
Non-controlling interest (full-goodwill), December 31, 20x4
Book value of SHE S, 12/31/20x4
Add: Net income of S 20x4
Total
Less: Dividends paid 20x4
Stockholders equity S Company, December 31, Year 2
Adjustments to reflect fair value - (over) undervaluation of assets and
liabilities, date of acquisition January 1, 20x4
Amortization of allocated excess (refer to amortization above: P200,000/10
Fair value of stockholders equity of subsidiary, December 31, 20x5
Multiplied by: Non-controlling Interest percentage...
Non-controlling interest (partial)
Add: NCI on full-goodwill P85,714 P60,000)
Non-controlling interest (full)
P1,000,000
___150,000
P1,150,000
____90,000
P1,060,000
200,000
_( 20,000)
P1,240,000
30
%
P 372,000
___25,714
P397,714
P86,000
40%
P34,400
P180,000
52,000
(5,600)
34,400
P260,800
P260,000
200,000
60,000
(12,000)
P508,000
33. b
P385,000
(34,000)
P351,000
P165,000
54,000
P219,000
44. c
2012
P 35,000
10,000
Trademark: P50,000 / 16
Total expenses
65.
66.
67.
68.
69.
70.
71.
3,125
P909,625
9,625
P
1,350,000
Add: Controlling
Interest in Consolidated Net Income or Profit
attributable to
equity holders of parent for 20x4
Total
Less: Dividends paid P Company for 20x4
Consolidated Retained Earnings, December 31, 20x4 (under equity
method)
Net Income from own operations:
Sales
Less: cost of goods sold
Gross profit
Less: Depreciation expense
Other expenses
Net income
Non-controlling interest (full-goodwill), December 31, 20x4
P Company
S Company
Total
Less: Non-controlling Interest in Net Income
Amortization of allocated excess (refer to amortization above)
Goodwill impairment (impairment under full-goodwill approach)
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent..
490,375
P1,840,375
195,000
P1,645,375
P Co
P900,000
360,000
P540,000
140,000
100,000
P300,000
S Co
P500,000
200,000
P300,000
40,000
60,000
P200,000
P300,000
200,000
P500,000
P
0
9,625
_
0
9,625
P490,375
72. No answer available (P80,000 x 100%) = P80,000. Refer to No. 71 for further
discussion
Note: Normally, the term used in the requirement equity in subsidiary income, is a
term used under equity method, but it should be noted that under PAS 27, it prohibits the
use of equity method for a parent to consolidate a subsidiary. But, assuming the use of
equity method, the answer would be, P190,375.
Share in net income: P200,000 x 100%
P200,000
Less: Amortization of allocated excess
9,625
P190,375
73. b
Decrease in Buildings account:
Fair value
Book value..
Decrease.
74. d
P 8,000
__10,000
P 2,000
P 2,000
200
P 1,800
P 1,800
200
P 1,600
P 14,000
__18,000
P 4,000
75. d
76. a
77. a
P
P
4,000
1,000
3,000
78. a
Increase in equipment account (refer to No. 77)
Less: Decrease due to depreciation (P4,000/4
Increase in equipment accounts..
79. a
P 3,000
1,000
P 2,000
P 11,000
_
0
P 11,000
P 11,000
2,200
P 8,800
84. d
8,800
2,200
6,600
85. a
Under the cost method, an investor recognizes its investment in the investee at
cost. Income is recognized only to the extent that the investor receives distributions
from the accumulated net profits (or dividend declared/paid by the investee) of the
investee arising after the date of acquisition by the investor. Distributions
(dividends) received in excess of such profits are regarded as a recovery of
investment and are accounted for as a reduction of the cost of the
investment (i.e., as a return of capital or liquidating dividend).
Therefore, the investment balance of P500,000 on the acquisition date remains to be
the same.
86.
87.
88.
89.
90.
91.
92. c
Full/Gross-up Goodwill Presentation:
Non-controlling interest in Net Income:
Subsidiary net income from own operations.P120,000
Less: Amortization of allocated excess*
7,000
Impairment of full-goodwill (if any)**
0
P113,000
x: Non-controlling interests.
20%
P 22,600
P 560,000
70,000
7,000
P 623,000
20%
P 124,600
11,000
P 135,600
* this computation (i.e., P55,000 x 20%) should only be use when the fair value of the non-controlling interest of
acquiree (subsidiary) is not given.
Partial Goodwill:
Fair value of Subsidiary:
Fair value of consideration transferred: Cash
P 500,000
Less: Book value of Net Assets (Stockholders
Equity - Subsidiary): (P300,000 + P200,000) x 80%..
400,000
Allocated Excess..
P 100,000
Less: Over/Undervaluation of Assets and Liabilities:
Increase in equipment: P30,000 x 80%...................... P 24,000
Increase in building: P40,000 x 80%..........................
32,000 56,000
Goodwill (Partial)..
P 44,000
Full-goodwill:
(100%) Fair value of Subsidiary:
(100%) Fair value of consideration transferred:
P500,000 / 80%..........
Less: Book value of Net Assets (Stockholders
Equity - Subsidiary)...................................
Allocated Excess..
Less: Over/Undervaluation of Assets and
Liabilities (P40,000 + P30,000).
Goodwill (Full/Gross-up)....
P 625,000
500,000
P 125,000
70,000
P 55,000
95. e
P 686,000
20%
P 137,200
11,000
P 148,200
96. e
97. b
P: BV,12/31/20x5
P 975,000
S:
BV of building, 12/31/20x5
P105,000
Add: Adjustments to reflect fair value, 1/4/20x4
(P120,000 P90,000)
30,000
Less: Amortization of excess (P30,000/10) x 2 years
6,000
129,000
P1,104,000
98. b P500,000 + P3,461
99. b
100. c
Fair Value of Subsidiary:
Consideration Transferred (5,400 shares)
Less: Book value of SHE-S, 1/1:
Common stock S: P50,000 x 90%
APIC S: P15,000 x 90%
RE S: P41,000 x 90%
Allocated Excess
Less: Over/undervaluation of A & L:
Increase in Inv. (P17,100P16,100) x 90%
P120,600
P 45,000
13,500
36,900
P
900
95,400
P 25,200
10%
12,010
P 48,000
32,090
15,000
P 65,090
P154,000
81,600
65,090
P300,690
12,010
P312,700
114. b
115. b Dividend paid S, P70,000 x 60% = P42,000
116. d CNI amounted to P265,000 [CI-CNI, P235,000 (refer to No. 117) and NCI-CNI,
P30,000 (refer to No. 118)]
Peer
Sea-Breeze
Consolidated
Net income from own operations:
Parent
190,000
Subsidiary
54,000
36,000
Amortization of allocated excess
( 9,000)
( 6,000)
Impairment of goodwill
(
0)
(
0)
235,000
30,000
265,000
CI-CNI
NCI-CNI
CNI
Sales
Less: Cost of goods sold Operating expenses
Net income from its own separate operations
Add: Investment income
Net income
Peer
P 600,000
410,000
P 190,000
45,000
P 235,000
Computation of Goodwill:
Fair value of Subsidiary (100%)
Consideration transferred: Cash (60%)
Fair value of NCI (given) (40%)
Fair value of Subsidiary (100%)
Less: Book value of stockholders equity of Sea (P550,000 x
100%)
Sea-Breeze
P 300,000
210,000
P 90,000
P 90,000
P 414,000
276,000
P 690,000
__550,000
Fair Value
360,000
280,000
100,000
140,000
140,000
0
Over/under
P 60,000
(20,000)
100,000
P 140,000
Amort.
P 10,000
(5,000)
10,000
P 15,000
P700,000
P 300,000
70,000
P 230,000
45,000
P 185,000
60%
P
111,000
0
111,00
0
P 811,000
Since, the P811,000 is the retained earnings of parent under the equity method, it should also be
considered as the parents portion or interest in consolidated retained earnings or simply the
consolidated retained earnings.
P 811,000
235,00
0
P1,046,00
0
92,00
0
P
954,000
(P15,000 x 4)
Fair value of stockholders equity of subsidiary, 12/31/ 2015
Multiplied by: Non-controlling Interest percentage.
Non-controlling interest (partial)
Add: NCI on full-goodwill.
Non-controlling interest (full)
P300,00
0
90,00
0
70,00
0
320,000
P
800,000
140,000
( 60,000
)
P
880,000
4
0
P
352,000
____0
P
352,000
125. c
Stockholders Equity
Common stock - Peer
Retained earnings
Parents Stockholders Equity/Equity Attributable to the
Owners of the Parent
Non-controlling interest**
Total Stockholders Equity (Total Equity)
Total Liabilities and Stockholders Equity
126. c
P
724,000
954,000
P
1,678,000
352,000
P 985,500
P2,030,000
Investment in Sea-Breeze
1/1/x2.
414,000
42,000
S
Retro
111,000
60%
Investment Income
Dividends
NI of S
(70,000 x
NI of S
(90,000
Amortizatio
Amortization
(90,000
n
x
54,000
12/31/x5
528,000
60%).
9,000
60%)
(P15,000 x
(P15,000 x 60%)
9,000
54,000
60%)
45,000
127. c
128. d refer to No. 116
129. c refer to No. 117
130. No requirement
131. b refer to No. 118
132. c refer to No. 119
133. c refer to No. 120
134. a not applicable under equity method.
135. d refer to No. 122
136. d refer to No. 123
137. d refer to No. 124
138. c refer to No. 125
139. b building account in the books of subsidiary at fair value
140. e building account in the books of subsidiary at book value
141. d push-down accounting: equipment account in the books of subsidiary is at fair value
142. c P120,000 x 70%
143. c
Investment.1/1/20x4
P210,000
Add: Share in net income 20x4 (P90,000 x 70%)
63,000
Less: Dividends received
24,000
Investment, 12/31/20x4
P249,000
Add: Share in net income 20x5 (P120,000 x 70%)
84,000
Less: Dividends received
36,000
Investment, 12/31/20x5
P297,000
Note: The term received means that is the amount attributable to parent. If the
term declared or paid were used then it should be multiplied further by controlling
interest.
P105,000
36,000
12,000
P129,000
48,000
18,000
P159,000
148. b
Fullgoodwill Aproach
Fair value of Subsidiary (100%)
Consideration transferred (80%)..
Fair value of NCI (given) (20%)..
Fair value of Subsidiary (100%).
Less: Book value of stockholders equity of Son:
Common stock (P100,000 x 100%)
.
Retained earnings (P60,000 x 100%)...
Allocated excess (excess of cost over book value)
..
Less: Over/under valuation of assets and liabilities:
Increase in land (P5,000 x 100%)
.
Increase in equipment (P10,000 x 100%)
Positive excess: Full-goodwill (excess of cost over
fair value)
...
P 180,000
20,000
P 200,000
P 100,000
60,000
160,000
P 40,000
P
5,000
___10,000
15,000
P 25,000
Partial-Goodwill Approach
Fair value of Subsidiary (90%)
Consideration
transferred..
Less: Book value of stockholders equity of S:
Common stock (P100,000 x 90%)
.
Retained earnings (P60,000 x 90%)
...
Allocated excess (excess of cost over book value)
..
Less: Over/under valuation of assets and liabilities:
Increase in land (P5,000 x 90%)
.
Increase in equipment (P10,000 x 90%)
Positive excess: partial-goodwill (excess of cost over
fair value)
...
P 180,000
P 90,000
54,000
144,000
P
4,500
___9,000
36,000
13,500
P 22,500
Account
Adjustments
to
amortized
Subject to Annual Amortization
Equipment (net).........
be
Over/
under
Lif
e
10,000
Patent
25,000
Annual
Amount
Current
Year(20x4)
P 2,000
5,00
0
P 7,000
P 2,000
5,000
P 7,000
149. d
Investment in Wisden
1/1/x4.
180,000
18,000
S
Dividends
(20,000 x
90%)
NI of S
(60,000
Amortizatio
n
x
54,000
90%).
12,600
90%)
(P14,000 x
1/1/x6
203,400
150. c
Investment in Wisden
1/1/x6.
230,400
9,000
Dividends S
Theories
1
.
2
.
3
.
4
.
5
.
6.
11.
16.
21.
90%)B
26.
7.
12.
17.
22.
8.
c*
13.
18.
23.
9.
14.
19.
24.
10,
15,
20.
25.
NI of S
(30,000
c
27,000
1/1/x6
215,100
90%).
6,300
(10,000 x
31
36.
27.
32.
37.
28.
33.
38.
29.
34.
39.
30.
35.
40.
Amortization
(7,000 x 90%)
*partial equity is the same with equity method except that amortization of allocated excess is not recognized in the
investment and income account.
41
.
42
.
43
.
44
.
45
.
B
C
D
A
c
46
.
47
.
48
.
49
.
50
,