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Consolidated sales
Sales Papa P 900,000
Sales San 500,000
Elimination of inter-company sales ( 50,000)
Consolidated sales P 1,350,000
17-2: c
17-3: d
17-4: b
90
17-5: d
17-6: d
CI from own operation Puzon P 200,000
Suazons adjusted CI from own operations:
CI P110,000
Unrealized profit in ending inventory-
Upstream (P25,000 x 40%) ( 10,000) 100,000
Consolidated CI P 300,000
Attributable to NCI (P100,000 x 25%) (25.000)
Attributable to parent P 275,000
17-7: b
2012 2013
CI from own operation Pat P 500,000 P 550,000
Unrealized profit in ending inventory:
2012 (P20,000 x .40) (8,000)
2013 (P30,000 x .50) (15,000)
Realized profit in beginning inventory 8,000
Realized CI 492,000 543,000
Sun CI 200,000 225,000
Consolidated CI P 692,000 P 768,000
17-8: a
91
17-9: a
CI from own operations Popo P 500,000
Unrealized profit in ending inventory Downstream ( 15,000)
Realized CI from own operation Popo P 485,000
Adjusted CI from own operations - Sotto
CI P 360,000
Realized profit in beginning inventory-
Upstream 10,000 370,000
Consolidated CI P 855,000
Attributable to NCI (P370,000 x 5%) 18,500
Attributable to parent P 836,500
17-10: d
CI Sand Company P200,000
Realized profit in beg. Inventory (P120,000 x .20) 24,000
Unrealized profit in ending inventory (P360,000 x .20) (72,000)
Amortization of allocated excess P1.000,000 / 5) (200,000)
Adjusted net loss Sand Company P(48,000)
NCI (P48,000 x 40%) P(19,200)
17-11: d
Gross profit rate Short (P110,000 / P200,000) 55%
Inventories
Inventory from outsiders Power P 5,000
Inventory from outsiders Short 25,000
Powers inventory acquired from Short at cost:
[P5,000 (P5,000 x 55%)} 2,250
Consolidated ending inventories P 32,250
Investment income
Powers share of Shorts CI (P50,000 x 75%) P 37,500
Unrealized profit in ending inventory upstream
(P5,000 x 55%) x 75% ( 2,063)
Realized profit in beginning inventory upstream
(P10,000 x 55%) x 75% 4,125
Investment income, Dec. 31, 2013 P 39,562
92
17-12: b
17-13: b
Consolidated CI
CI from own operations Pig P 200,000
Sirs adjusted CI:
CI P 80,000
Realized profit in beginning inventory 21,000
Unrealized profit in ending inventory (18,000) 83,000
Consolidated CI 283,000
Attributable to NCI (P83,000 x 10%) (8,300)
Attributable to parent P 274,700
93
17-14: a
2011 2012 2013
Pal Corp CI 150,000 240,000 300,000
Intercompany profit in ending inventory:
2011 (14,000) 14,000
2012 (21,000) 21,000
2013 ( 24,000)
Pal CI from own operation 136,000 233,000 297,000
Solo CI from own operation 100,000 90,000 160,000
Consolidated CI 236,000 323,000 427,000
Attributable to NCI
2011(100,000 14,000) x 40% 34,400
2012(90,000 +14,000 21,000) 40% 33,200
2013(160,000 + 21,000 24,000) 40% 62,800
Attributable to Parent 201,600 289,800 394,200
17-15: a
17-16: c
Total cost of goods sold (250,000 +120,000) 370,000
Adjustments due to intercompany sale:
COGS charged for intercompany sale (20,000 + 50,000) 70,000
COGS charged by: Star (30,000 6,000) 24,000
Polo (80,000 20,000) 60,000
Total 154,000
Cost of goods sold for consolidated entity:
20,000 x (24,000/30,000) (16,000)
50,000 x (60,000/80,000) (37,500) (100,500)
Consolidated cost of goods sold 269,500
17-17: c
Polo Corp. CI from own operation (105,000 25,000) 80,000
Unrealized profit in ending inventory-DS (6,000 x 10/30)
(2,000)
Adjusted Polo Corp. CI from own operation 78,000
Star Corp. CI from own operation:
CI 45,000
Unrealized profit in EI-US (20,000 x 30/80) (7,500)
Amortization (20,000/10 years) (2,000) 35,500
Consolidated CI 113,500
Attributable to NCI (35,500 x 40%) (14,200)
Attributable to Parent 99,300
94
17-18: a
17-19: a
Inventory-Pepsi P 30,000
Less: unrealized profit in books of Sarsi:
(135,000 90,000) x (30,000/135,000) (10,000) 20,000
Inventory-Sarsi P110,000
Less: unrealized profit in books of Pepsi:
(280,000 140,000) x (110,000/280,000) (55,000) 55,000
Consolidated inventory 12/31/13 75,000
17-20: a
17-21: b
Pepsi CI 220,000
Sarsi CI 85,000
Realized profit in beginning inventory - 2011 15,000
Unrealized profit in ending inventory- Sarsi (10,000)
Unrealized profit in ending inventory- Pepsi (55,000)
Consolidated CI 2013 255,000
95
17-22: b
CI from own operations P Company P200,000
S Co. adjusted CI:
CI S P30,000
Unrealized profit in ending inventory
Upstream (P9,000 x 50/150) (3,000)
Realized profit in beginning inventory-
Upstream (P6,000 x 50/150) 2,000 29,000
Consolidated CI 229,000
17-23: b
17-24: c
S Company:
Sales P416,000
Cost of goods sold (P400,000 x 80%) P320,000
Add write down of ending inventory 10,000 330,000
Gross profit P 86,000
17.25 a
Sales P416,000
Consolidated cost of goods sold 256,000*
Gross profit P160,000
96
17-26: a
Supporting computations:
(1) Sales:
Pablo Company P220,000
Sally Company 120,000
Intercompany sales (70,000)
Consolidated sales P270,000
97
PROBLEMS
Problem 17-1
The computation of the selected consolidation balances are affected by the inter-company profit
in downstream intercompany sales as computed below:
a. Consolidated Sales
Apo P800,000
Bicol 600,000
Intercompany sales 2013 (250,000)
Total P1,150,000
b. Cost of goods sold
Apos book value P 535,000
Bicols book value 400,000
Intercompany sales-2013 (250,000)
Realized profit in beginning inventory 2013 ( 14,400)
Unrealized profit in ending inventory 2013 10,000
Consolidated cost of goods sold P 680,600
c. Operating expenses
Apo P 100,000
Bicol 100,000
Total P 200,000
f. Inventory
Apo P 298,000
Bicol 700,000
Unrealized profit in ending inventory, Dec. 31, 2013 (10,000)
Consolidated inventory P 988,000
98
Problem 17-1, continued:
g. NCI
NCI, December 31, 2012 [ (P902,000/80%) x 20%] P225,500
NCI in dividends paid by Bicol (P50,000 x 20%) (10,000)
NCI in CI of subsidiary (P100,000 x 20%) 20,000
Total NCI, 12/31/13 P235,500
Problem 17-2
Schedule 1:
Cost of sales P Company P 800,000
Purchases from S Company (600,000)
Intercompany profit in beginning inventory (P60,000 x 25%) ( 15,000)
Intercompany profit in ending inventory (P76,000 x 25%) 19,000
Total P 204,000
Cost of sales S Company 500,000
Consolidated cost of sales P 704,000
Schedule 2:
CI S Company P 180,000
Realized profit in beginning inventory Upstream 15,000
Unrealized profit in ending inventory Upstream (19,000)
Adjusted CI P 176,000
NCI proportionate share x 25%
NCI in CI of subsidiary P 44,000
Problem 17-3
99
To eliminate intercompany dividends.
b. Consolidated CI
P Company CI from own operations (P250,000 P32,000) P 218,000
S Company adjusted CI 45,000
Consolidated CI P 263,000
c. Non-controlling Interest
NCI, August 30, 2013 [(P248,000/80%) x 20%] P 62,000
NCI in subsidiary dividends [(P32,000/80%) x 20%] ( 8,000)
NCI in CI of subsidiary 9,000
NCI P 63,000
100
Problem 17-4
a. Consolidated Sales
Reported total sales (P600,000 + P510,000) P1,170,000
Intercompany sales (P140,000 + P240,000) (380,000)
Consolidated sales P 790,000
Downstream Sales
Sales 140,000
Inventory (P42,000 x 40/140) 12,000
Cost of goods sold 128,000
Upstream Sales
Sales 240,000
Inventory (P48,000 x 20/120) 8,000
Cost of goods sold 232,000
101
Problem 17-5
Statement of CI
Sales 12,000,000 1,300,000 (5) 400,000 12,900,000
Dividend income 210,000 (1) 210,000 -
Total revenue 12,210,000 1,300,000 12,900,000
Cost of goods sold 7,000,000 750,000 (7) 30,000 (5) 400,000 7,380,000
Operating expenses 4,210,000 50,000 (4) 40,000 4,300,000
Total cost and expenses 11,210,000 800,000 11,680,000
Statement of Retained
Earnings
Retained earnings, January 1 5,500,000 2,200,000 (2)2,200,000 5,500,000
CI from above 1,000,000 500,000 1,220,000
Total 6,500,000 2,700,000 6,720,000
Dividends declared - 210,000 (1) 210,000 -
Retained earnings,12/31 to BS 6,500,000 2,490,000 6,720,000
Statement of FP
Cash 810,000 170,000 980,000
Accounts receivable 425,000 445,000 (6) 25,000 845,000
Inventory 600,000 275,000 (7) 30,000 845,000
Property, plant and equipment 4,000,000 2,300,000 (3) 400,000 (4) 40,000 6,660,000
Investment in S Company 3,200,000 (2)2,800,000 -
(3) 400,000
102
Problem 17-5, Continued
Problem 17-6
103
Po Company and Subsidiary So Company
Consolidation Working Paper
Year Ended December 31, 2013
Eliminations Adjustments Consoli-
Po Company So Company Debit Credit dated
Statement of CI
Sales 880,000 630,000 (6) 32,000
(8) 30,000 1,448,000
Dividend income 24,000 (2) 24,000 -
Total revenue 904,000 630,000 1,448,000
Cost of goods sold 704,000 504,000 (7) 1,320 (5) 1,350
(10) 750 (6) 32,000
(8) 700
(9) 30,000 1,146,020
Other expenses 130,000 81,000 211,000
Total cost and expenses 834,000 585,000 1,357,020
CI 70,000 45,000 90,980
NCI in CI of Subsidiary (12) 8,990 (8,990)
CI to retained earnings 70,000 45,000 81,990
Statement of Retained
Earnings
Retained earnings, January 1 1,105,000 140,000 (1) 8,000
(3)100,000
(5) 1,350
(8) 560 1,135,090
CI from above 70,000 45,000 81,990
Total 1,175,000 185,000 1,217,080
Dividends declared 25,000 30,000 (2) 30,000 25,000
Retained earnings,12/31 to BS 1,150,000 155,000 1,192,080
Statement of FP
Cash 216,200 44,300 260,500
Accounts receivable 290,000 97,000 (11) 15,000 372,000
Inventory 310,000 80,000 (7) 1,320
(10) 750 387,930
Pant assets (net) 1,991,000 340,000 2,331,000
Investment in S Company 425,000 (3)320,000
(4)105,000 -
Goodwill 60,000 (4)131,250 191,250
Total assets 3,292,200 561,300 3,542,680
104
Eliminations and Adjustments
(1) Recognize NCI in subsidiarys increase in undistributed earnings (P40,000 x 20%)
(2) Eliminate intercompany dividends.
(3) Eliminate subsidiarys equity at date of acquisition
(4) Allocate excess to goodwill.
(5) Eliminate realized profit in beginning inventory (P9,000 x 15%) = P1,350
(Downstream)
(6) Eliminate intercompany downstream sales from April 1, 2012 to March 31, 2013,
P32,000.
(7) Eliminated unrealized profit in ending inventory (downstream), P6,000 x 22% =
P1,320.
(8) Eliminate realized profit in beginning inventory (upstream) P3,500 x 20% = P700.
(9) Eliminate intecompany upstream sales on March 31, 2013, P30,000.
(10) Eliminate unrealized profit in ending inventory (upstream), P3,000 x 25% = P750.
(11) Eliminate intercompany payables and receivables ,P10,000 + P5,000 = P15,000.
(12) Recognized non-controlling interest (NCI) in CI of subsidiary computed as follows:
CI of So Company P45,000
Realized profit in beginning inventory (upstream) 700
Unrealized profit in ending inventory (upstream) (750)
Adjusted CI P44,950
NCI share 20%
NCI in CI of subsidiary P 8,990
(2)
Po Company and Subsidiary So Company
Consolidated Statement of Comprehensive Income
Fiscal Year Ended March 31, 2013
Sales P1,448,000
Cost of goods sold 1,146,020
Gross profit 301,980
Expenses 211,000
Consolidated CI P 90,980
Attributable to NCI 8,990
Attributable to controlling interest P 81,990
105
Problem 17-7
b. Intercompany Sales
Sales P Company P2,000,000
Sales S Company 1,000,000
Intercompany sales 2013 (400,000)
Consolidated sales P2,600,000
106
Problem 17-7, continued:
d. Working Paper Eliminating Entries:
107
Consolidated CI P504,000
108