Chapter 15

Multiple Choice Problems

1. c at fair value
2. c [P300,000 (P35,000 + P60,000 + 125,000 + P250,000 P65,000 P150,000)]
3. d
Consideration transferred
P300,000
Less: Book value of SHE of S (P100,000 + P115,000)
215,000
Allocated excess (excess of fair value or cost over book value)
- sometimes termed as Differential
P 85,000
4. a Investment in subsidiary in the consolidated statements is eliminated in its entirety.
5. d
Consideration transferred
P150,000
Less: Book value of SHE of S (P40,000 + P52,000)
92,000
Allocated excess (excess of fair value or cost over book value)
- sometimes termed as Differential
P 58,000
6. b [P150,000 (P173,000 P40,000 P5,000)]
7. d - P600,000 - P15,000 - P255,000 = P330,000
8. c - P475,000 - P300,000 = P175,000 debit
9. b fair value
10. d fair value
11. d fair value
12. c Full-goodwill:
Fair value of Subsidiary:
Consideration transferred
Add: FV of NCI
Less: BV of SHE of Silver (P100,000 + P180,000) x
100%
Allocated excess
Less: Over/under valuation of A and L: Inc. (Dec.)
Inventory (P65,000 P70,000) x 100%
Land (P100,000 P90,000) x 100%
Buildings and equipment (P300,000 P250,00) x
100%
Goodwill full

P300,000
100,000

P400,000
280,000
P120,000

P( 5,000
)
10,000
50,000

If partial-goodwill, no answer available, computed as follows:

Fair value of Subsidiary:
Consideration transferred
Less: BV of SHE of Silver (P100,000 + P180,000) x
75%
Allocated excess
Less: Over/under valuation of A and L: Inc. (Dec.)
Inventory (P65,000 P70,000) x 75%
P( 3,75
0)
Land (P100,000 P90,000) x 75%
7,500
Buildings and equipment (P300,000 P250,00) x
37,500
75%
Goodwill full

__55,000
P 65,000

P300,000
_210,000
P 90,000

__41,250
P 48,750

13. a Investment in Silver will be eliminated in the consolidated balance sheet

14. d
FV of SHE of S:
Book value of SHE of S (P100,000 + P180,000)..P 280,000
Adjustments to reflect fair value
55,000
FV of SHE of S P 335,000
Multiplied by: NCI%....................................................................
25%
FV of NCI (partial).P 83,750
Add: NCI on full goodwill (P65,000 P48,750)..
16,250
FV of NCI (full-goodwill)*P100,000
* same with the NCI given per problem

15. b P135,000 = P90,000 + P45,000

16. d
Full-goodwill:
Fair value of Subsidiary:
Consideration transferred
Add: FV of NCI
Less: BV of SHE of Silver (P40,000 + P120,000) x
100%
Allocated excess
Less: Over/under valuation of A and L: Inc. (Dec.)
Inventory (P45,000 P40,000) x 100%
Land (P60,000 P40,000) x 100%
Goodwill full

P160,000
_40,000

17. a
Total Assets of Gulliver (Jonathan)
Less: Investment in Sea-Gull Corp.
Book value of assets of Sea Corp.
Book value reported by Gulliver/Jonathan and Sea
Increase in inventory (P45,000 P40,000)
Increase in land (P60,000 P40,000)
Goodwill (full)*
Total assets reported

P200,000
_160,000
P 40,000

P 5,000
20,000

25,000
P 15,000
P610,000
(160,000)
P 450,000
230,000
P
680,000
5,000
20,000
15,000
P 720,000

18. c P100,000 + P95,000 + P30,000 + P40,000 = P265,000

19. c

FV of SHE of S:
Book value of SHE of S (P40,000 + P120,000).P 160,000
Adjustments to reflect fair value [(P45,000 + P60,000) (P40,000 + P40,000).
25,000
FV of SHE of S P 185,000
Multiplied by: NCI%....................................................................
20%
FV of NCI (partial).P 37,000
Add: NCI on full goodwill (P15,000 P12,000)..
3,000
FV of NCI (full-goodwill)* P 40,000
* same with the NCI given per problem
Partial Goodwill
Fair value of Subsidiary:
Consideration transferred

P160,000

Less: BV of SHE of S (P40,000 + P120,000) x

80%
Allocated excess
Less: Over/under valuation of A and L: Inc. (Dec.)
Inventory (P5,000 x 80%)
Land (P20,000 x 80%)
Goodwill partial

_128,000
P 32,000
P 4,000
16,000

__20,000
P 12,000

20. a - The amount reported by Jonathan Corporation

21. a
Jonathan stockholders' equity(P200,000 + P205,000).. P405,000
NCI (full-goodwill) refer to No. 19..
40,000
Consolidated stockholders equity. P445,000
22. d [P132,000 + (P38,000 + {P60,000 P38,000}] or P132,000 + P60,000
23. b
Total Assets of P.
P1,278,000
Less: Investment in Swimmer Corp.
(440,000)
P 838,000
Book value of assets of S Corp.
542,000
Book value reported by P and S
P1,380,00
0
Increase in inventory (P60,000 P38,000)
22,000
Increase in land (P60,000 P32,000)
28,000
Increase in plant assets [P350,000 (P300,000
110,00
P60,000)]
0
Goodwill (full)*
26,667
Total assets reported
P1,566,667
*(P440,000/75%) (P702,000 P142,000) = P26,667
If partial-goodwill:
Total Assets of P.
Less: Investment in S Corp.
Book value of assets of S Corp.
Book value reported by P and S
Increase in inventory (P60,000 P38,000)
Increase in land (P60,000 P32,000)
Increase in plant assets [P350,000 (P300,000
P60,000)]
Goodwill (partial)*
Total assets reported
*[P440,000 (P702,000 P142,000) x 75%]
24.
25.

P1,278,000
(440,000)
P 838,000
542,000
P1,380,00
0
22,000
28,000
110,00
0
20,000
P1,540,000

d
P215,000
= P130,000 + P70,000 + (P85,000 - P70,000)
a
Partial Goodwill
Fair value of Subsidiary:
Consideration transferred
Less: BV of SHE of SSD (P50,000 + P90,000) x 70%
Allocated excess
Less: Over/under valuation of A and L: Inc. (Dec.)
Inventory (P15,000 x 70%)
P
10,500
Land (P20,000 x 70%)
14,000

P150,500
__98,000
P 52,500

24,500

Goodwill partial
26.

P 28,000

c
Full-goodwill:
Fair value of Subsidiary:
Consideration transferred
Add: FV of NCI
Less: BV of SHE of SS (P50,000 + P90,000) x 100%
Allocated excess
Less: Over/under valuation of A and L: Inc. (Dec.)
Inventory (P70,000 P85,000) x 100%
Land (P25,000 P45,000) x 100%
Goodwill full

P150,500
**64,500

P 15,000
20,000

P215,000
140,000
P 75,000
35,000
P 40,000

**given amount, but it should not be lower than the fair value of SHE subsidiary amounting
to
P52,500 computed as follows :

FV of SHE of SS:
Book value of SHE of SS (P50,000 + P90,000).P 140,000
Adjustments to reflect fair value (P15,000 + P20,000)
35,000
FV of SHE of SS P 175,000
Multiplied by: NCI%..........................................................
30%
FV of NCI (partial)..P 52,500

27. b

Total Assets of Power Corp.

Less: Investment in Silk Corp.
Book value of assets of Silk Corp.
Book value reported by Power and
Silk
Increase in inventory (P85,000 - P70,000)
Increase in land (P45,000 - P25,000)
Goodwill (full)
Total assets reported

If partial-goodwill:
Total Assets of Power Corp.
Less: Investment in Silk Corp.
Book value of assets of Silk Corp.
Book value reported by Power and
Silk
Increase in inventory (P85,000 - P70,000)
Increase in land (P45,000 - P25,000)
Goodwill (partial)
Total assets reported
28
.

P701,500

P 791,500
(150,500)
P 641,000
405,000
P1,046,000
15,000
20,000
40,000
P1,121,000
P 791,500
(150,500)
P 641,000
405,000
P1,046,000
15,000
20,000
28,000
P1,109,000

= (P61,500 + P95,000 + P280,000) + (P28,000 + P37,000

+ P200,000)

29.

a
Non-controlling interest (partial-goodwill): P52,500
NCI

FV of SHE of SSD:
Book value of SHE of SS (P50,000 + P90,000).P 140,000
Adjustments to reflect fair value (P15,000 + P20,000)
35,000
FV of SHE of SSD
P 175,000
Multiplied by: NCI%..........................................................
30%
FV of NCI (partial)..P 52,500

30
.

d
Non-controlling interest (fulll-goodwill): P64,500
NCI

FV of SHE of SSD:
Book value of SHE of SS (P50,000 + P90,000).P 140,000
Adjustments to reflect fair value (P15,000 + P20,000)
35,000
FV of SHE of SSD
P 175,000
Multiplied by: NCI%..........................................................
30%
FV of NCI (partial)..P 52,500
Add: NCI on full-goodwill (P40,000 P12,000)... 12,000
FV of NCI (full)..P 64,500