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Problem 16-7

a.

Working Paper Elimination Entries


(1)

(2)

(3)

Dividend income
Minority interest in net assets of subsidiary
Dividends declared Sisa

8,000
2,000
10,000

Common stock Sisa


100,000
Retained earnings Sisa
50,000
Investment in Sisa stock
Minority interest in net assets of subsidiary
Minority interest in net income of subsidiary
Minority interest in net assets of subsidiary

120,000
30,000

6,000
6,000

b.

Popo Corporation and Subsidiary


Consolidated Working Paper
December 31, 2008
Popo
Corporation
Income Statement
Sales
200,000
Dividend income
8,000
Total revenue
208,000
Depreciation expense
25,000
Other expenses
105,000
Total expenses
130,000
Net income
78,000
MI in net income of Sub.
Net income carried forward
78,000
Retained Earnings
Retained earnings, 1/1
Net income from above
Total
Dividends declared
Retained earnings, 12/31
Carried forward

Sisa
Company

Adjustments

& Eliminations

Debit

Credit

120,000

Consolidated
320,000
320,000
40,000
180,000
220,000
100,000
( 6,000)
94,000

(1) 8,000
120,000
15,000
75,000
90,000
30,000
(3) 6,000
30,000

230,000
78,000
308,000
40,000

50,000
30,000
80,000
10,000

268,000

70,000

284,000

173,000
500,000
120,000
793,000

105,000
300,000
405,000

278,000
800,000
1,078,000

Accumulated depreciation
Current liabilities
Long-term debt
Common stock
Retained earnings , 12/31
From above
MI in net assets of Subsidiary

175,000
50,000
100,000
200,000

75,000
40,000
120,000
100,000

250,000
90,000
220,000
200,000

268,000

70,000

Total

793,000

Balance Sheet
Current assets
Depreciable assets
Investment in Sisa stock
Total

(2) 50,000
(1) 10,000

(2)120,000

(2)100,000
(1) 2,000

405,000

166,000

(2) 30,000
(3) 6,000
166,000

230,000
94,000
324,000
40,000

284,000
34,000
1,078,000

65

c.

Consolidated Financial Statements


Popo Corporation and Subsidiary
Consolidated Balance Sheet
December 31, 2008
Assets
Current assets
Depreciable assets
Less: Accumulated depreciation
Total assets
Liabilities and Stockholders Equity
Current liabilities
Long-term debt
Total liabilities
Stockholders Equity
Common stock
Retained earnings, 12/31
Minority interest in net assets of subsidiary
Total liabilities and stockholders equity

P278,000
P800,000
250,000

550,000
P828,000
P 90,000
220,000
P310,000

P200,000
284,000
34,000

518,000
P828,000

Popo Corporation and Subsidiary


Consolidated Income Statement
Year Ended December 31, 2008
Sales
Expenses:
Depreciation expense
Other expenses
Consolidated net income
Minority interest in net income of subsidiary
Consolidated net income attributable to parent

P320,000
P 40,000
180,000

220,000
P100,000
6,000
P 94,000

Popo Corporation and Subsidiary

66

Consolidated Retained Earnings


Year Ended December 31, 2008
Retained earnings, Jan. 1 Popo
Consolidated net income attributable to parent
Total
Dividends paid Popo
Consolidated retained earnings, Dec. 31

P230,000
94,000
P324,000
40,000
P284,000

Problem 16-8
a.

Palo Corporation and Subsidiary


Consolidation Working Paper
December 31, 2008
Adjustments

& Eliminations

Debit

Credit

Palo
Corporation

Sebo
Company

300,000
19,000
319,000
210,000
25,000
23,000
258,000
61,000

150,000

230,000
61,000
291,000
20,000

50,000
20,000
70,000
10,000

271,000

60,000

272,000

Balance Sheet
Cash
Accounts receivable
Inventory
Buildings and equipment
Investment in Sebo stock

37,000
50,000
70,000
300,000
229,000

20,000
30,000
60,000
240,000

57,000
80,000
130,000
540,000
-

Goodwill
Total

686,000

350,000

20,000
827,000

Accumulated depreciation
Accounts payable

105,000
40,000

65,000
20,000

170,000
60,000

Income Statement
Sales
Investment Income
Total revenues
Cost of goods sold
Depreciation expense
Other expenses
Total cost and expenses
Net income carried forward
Retained Earnings
Retained earnings, Jan. 1
Net income from above
Total
Dividends declared
Retained earnings, Dec. 31
carried forward

450,000
450,000
295,000
45,000
48,000
388,000
62,000

(1) 19,000
150,000
85,000
20,000
25,000
130,000
20,000
(2) 50,000
(1) 10,000

(1) 9,000
(2)200,000
(3) 20,000
(3) 20,000

Consolidated

230,000
62,000
292,000
20,000

67

Taxes payable
Common stock
Retained earnings, Dec. 31
from above
Total

b.

70,000
200,000

55,000
150,000

(2)150,000

271,000
686,000

60,000
350,000

239,000

125,000
200,000
239,000

272,000
827,000

Consolidated Financial Statements


Palo Corporation and Subsidiary
Consolidated Income Statement
Year Ended December 31, 2008
Sales
Cost of goods sold
Gross profit
Expenses:
Depreciation expenses
Other expenses
Consolidated net income

P450,000
295,000
155,000
P45,000
48,000

93,000
P 62,000

Palo Corporation and Subsidiary


Consolidated Retained Earnings
Year Ended December 31, 2008
Retained earnings, January 1 Palo
Consolidated net income
Total
Dividends paid Palo
Retained earnings, December 31

P230,000
62,000
292,000
20,000
P272,000

Palo Corporation and Subsidiary


Consolidated Balance Sheet
December 31, 2008
Assets
Cash
Accounts receivable
Inventory
Buildings and equipment
Less: Accumulated depreciation
Goodwill
Total

P 57,000
80,000
130,000
P540,000
170,000
370,000
20,000
P657,000

68

Liabilities and Stockholders Equity


Accounts payable
Taxes payable
Common stock
Retained earnings, Dec. 31
Total

P 60,000
125,000
200,000
272,000
P657,000

Problem 16-9
1.

Acquisition cost
Less: Book value of interest acquired (80%)
Common stock (P300,000 x 80%)
Retained earnings (P400,000 x 80%)
Difference
Allocation:
Inventories
Land
Building
Equipment
Patents
Total
Minority interest (20%)
Goodwill (not impaired)

P756,000
P240,000
320,000
P( 30,000)
( 50,000)
(100,000)
75,000
( 40,000)
P(145,000)
29,000

560,000
P196,000

(116,000)
P 80,000

Working Paper Elimination Entries - December 31, 2006(not required)


(1)

(2)

(3)

(4)

Investment income
Minority interest in net assets of subsidiary
Dividends declared S
Investment in S Company

94,800
10,000
50,000
54,800

Common stock S
300,000
Retained earnings, Jan. 1 S
400,000
Investment in S Co.
Minority interest in net assets of subsidiary

560,000
140,000

Inventories
30,000
Land
50,000
Building
100,000
Patents
40,000
Goodwill
80,000
Equipment
Investment in S Company
Minority interest in net assets of subsidiary

75,000
196,000
29,000

Cost of goods sold

30,000

69

Inventory

30,000

Equipment (P75,000 / 10)


Expenses (amortization)
Buildings (P100,000 / 20)
Patents (P40,000 / 10)
(5)

2.

7,500
1,500
5,000
4,000

Minority interest in net income of subsidiary


23,700
Minority interest in net assets of subsidiary
To established minority share in subsidiary net income.
Computed as follows:
Net income S Co.
P150,000
Amortization
31,500
Adjusted net income
P118,500
MINIS (P118,500 x 20%)
P 23,700

23,700

P Company and Subsidiary


Consolidated Working Paper
Year Ended December 31, 2008

Income Statement
Sales
Cost of sales
Gross profit
Expenses
Operating income
Investment income
Net /consolidated income
MI interest in net income of
Subsidiary
Net income carried forward
Retained earnings
Retained earnings, 1/1
Net income from above
Total
Dividends declared
Retained earnings, 12/31
Carried forward
Balance Sheet
Cash
Accounts receivable
Inventories
Land
Buildings (net)
Equipment (net)
Patent
Investment in S Co. stock
Goodwill
Total

Adjustments

& Eliminations

Debit

Credit

P
Company

S
Company

1,000,000
400,000
600,000
360,000
240,000
94,800
334,800

500,000
150,000
350,000
200,000
150,000
150,000

334,800

150,000

600,000
334,800
934,800
100,000

400,000
150,000
550,000
50,000

834,800

500,000

834,800

200,000
150,000
100,000

100,000
50,000
40,000
150,000
200,000
450,000
-

300,000
200,000
140,000
200,000
295,000
680,500
36,000
-

298,000
810,800

1,090,000

1,500,000
580,000
920,000
561,500
358,500
358,500

(4) 30,000
(4) 1,500
(1) 94,800
(5) 23,700

(23,700)
334,800

(2)400,000

600,000
334,800
934,800
100,000

(1) 50,000

(3) 30,000
(3) 50,000
(3)100,000
(4) 7,500
(3) 40,000

(3) 80,000
1,558,800

Consolidated

(4) 30,000
(4) 5,000
(3) 75,000
(4) 4,000
(1) 54,800
(2)560,000
(3)196,000

80,000
1,931,500

70

Accounts payable
Common stock
Additional paid-in capital
Retained earnings, 12/31
from above
MI in net assets of subsidiary
Total

124,000
200,000
400,000

190,000
300,000
-

834,800

500,000
(1) 10,000

1,558,800

314,000
200,000
400,000

(2)300,000

1,090,000

466,200

(2)140,000
(3) 29,000
(5) 23,700
466,200

834,800
182,700
1,931,500

Problem 16-10
a.

Investment in Sally Products Co.


Cash
To record acquisition of 80% stock of Sally.
Cash

160,000
160,000
8,000

Dividend income
To record dividends received from Sally (P10,000 x 80%)
b.

8,000

Working Paper Eliminating Entries Dec. 31, 2008


Allocation schedule:
Acquisition cost
Less: Book value of interest acquired (P150,000 x 80%)
Difference
Allocated to building and equipment
P (50,000)
Minority interest (20%)
10,000
(1)

(2)

(3)

(4)

Dividend income
Minority interest in net assets of subsidiary
Dividends declared Sally

P160,000
120,000
40,000
(40,000)

8,000
2,000
10,000

Common stock Sally


100,000
Retained earnings, 1/1 Sally
50,000
Investment in Sally Products
Minority interest in net assets of subsidiary

120,000
30,000

Building and equipment


50,000
Investment in Sally Products
Minority interest in net assets of subsidiary

40,000
10,000

Depreciation expense
Accumulated depreciation Bldg

5,000
5,000

71

(5)
(6)

c.

Accounts payables
Cash and receivables

10,000
10,000

Minority interest in net income of subsidiary


5,000
Minority interest in net assets of subsidiary
Computed as follows:
Net income Sally
P30,000
Amortization
(5,000)
Adjusted net income
P25,000
MINIS (P25,000 x 20%)
P 5,000

5,000

Pilar Corporation and Subsidiary


Consolidation Working Paper
December 31, 2008
Pilar
Corporation

Sally Wood
Products

Income Statement
Sales
Dividend income
Total revenue

200,000
8,000
208,000

100,000

Cost of goods sold


Depreciation expense
Inventory losses
Total cost and expenses
Net /consolidated income

120,000
25,000
15,000
160,000
48,000

50,000
15,000
5,000
70,000
30,000

& Eliminations

Debit

Credit

100,000

170,000
45,000
20,000
235,000
65,000

(4) 5,000

(6) 5,000
48,000

30,000

298,000
48,000
346,000
30,000

90,000
30,000
120,000
10,000

316,000

110,000

81,000
260,000
80,000
500,000
160,000

65,000
90,000
80,000
150,000

1,081,000

385,000

205,000

105,000

Consolidated
300,000
300,000

(1) 8,000

MI interest in net income of


subsidiary (MINIS
Net income carried forward

Adjustments

(5,000)
60,000

Retained earnings statement

Retained earnings, 1/1


Net income from above
Total
Dividends declared
Retained earnings, 12/31
carried forward
Balance Sheet
Cash and receivables
Inventory
Land
Buildings and equipment
Investment in Sally
Total
Accumulated depreciation

(2) 50,000
(1) 10,000

338,000
60,000
398,000
30,000
368,000

(5) 10,000
(3) 50,000
(2)120,000
(3) 40,000

136,000
350,000
160,000
700,000
1,346,000

(4) 5,000

315,000

72

Accounts payable
Notes payable
Common stock
Retained earnings from above
MI in net assets if subsidiary

Total

60,000
200,000
300,000
316,000

1,081,000

20,000
50,000
100,000
110,000

(5) 10,000
(2)100,000

385,000

(1) 2,000

(2) 30,000
(3) 10,000
(6) 5,000

230,000

230,000

70,000
250,000
300,000
368,000
43,000

1,346,000

Problem 16-11
a.

Eliminating entries:
E(1)

E(2)

E(3)

Dividend Income
Dividends Declared
Eliminate dividend income from subsidiary.

20,000

Common Stock Star Company


Retained Earnings, January 1
Differential
Investment in Star Company Stock
Eliminate investment balance at date
of acquisition.

150,000
50,000
20,000

20,000

220,000

Goodwill
Retained Earnings, January 1
Differential
Assign differential at beginning of year

8,000
12,000
20,000

Porno Corporation and Star Company


Consolidated Workingpaper
December 31, 2008
Light
_____Item_____
Credit Consolidated
Income Statement
Sales
Dividend income
Credits
Cost of goods sold
Depreciation expense
Other expenses
Debits
Net income, carry forward

350,000
20,000
370,000
270,000
25,000
21,000
(316,000)
54,000

Star

Eliminations
Corporation
Company

200,000
200,000
135,000
20,000
10,000
(165,000)
35,000

(1) 20,000

__

20,000

____

Debit
550,000
_______
550,000
405,000
45,000
31,000
(481,000)
69,000

73

Retained Earnings Statement


Retained earnings, Jan. 1
Net income, from above
Dividends declared
Retained earnings, Dec. 31,
carry forward

Balance Sheet
Cash
Accounts receivable
Inventory
Buildings and equipment
Investment in Star Company
stock
Differential
Goodwill
Debits
Accumulated depreciation
Accounts payable`
Taxes payable
Common stock
Light Corporation
Star Company
Retained earnings, from above
Credits

262,000

60,000

54,000
316,000
(20,000)

35,000
95,000
(20,000)

296,000

75,000

46,000
55,000
75,000
300,000

30,000
40,000
65,000
240,000

___

(1) 20,000

82,000

20,000

260,000
69,000
329,000
(20,000)
309,000

76,000
95,000
140,000
540,000

220,000
-

(2) 50,000
(3) 12,000
20,000

(2)220,000
(2) 20,000 (3) 20,000
(3) 8,000

696,000

375,000

8,000
859,000

130,000
20,000
50,000

85,000
30,000
35,000

215,000
50,000
85,000

200,000
296,000
696,000

200,000
150,000
75,000
375,000

(2)150,000
82,000
260,000

20,000
260,000

309,000
859,000

74

75

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