1. Parent Company issued 75,000 new shares of its P5 par value ordinary shares valued at P12 per share in exchange for 90% outstanding shares of Subsidiary Company on January 1, 2021. The fair value and book value of Subsidiary's identifiable assets and liabilities were the same except inventory which was understated by P30,000 and equipment which was overstated by P90,000 (remaining useful life of 10 years). The stockholders' equity of Parent and Subsidiary at the date of acquisition were as follows: Parent Subsidiary Share Capital 600,000 250,000 Share Premium 450,000 50,000 Retained Earnings 260,000 600,000
1. Parent Company issued 75,000 new shares of its P5 par value ordinary shares valued at P12 per share in exchange for 90% outstanding shares of Subsidiary Company on January 1, 2021. The fair value and book value of Subsidiary's identifiable assets and liabilities were the same except inventory which was understated by P30,000 and equipment which was overstated by P90,000 (remaining useful life of 10 years). The stockholders' equity of Parent and Subsidiary at the date of acquisition were as follows: Parent Subsidiary Share Capital 600,000 250,000 Share Premium 450,000 50,000 Retained Earnings 260,000 600,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 3RE: Shaquille Corporation began the current year with inventory of 50,000. During the year, its...
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![1. Parent Company issued 75,000 new shares of its P5 par value ordinary shares
valued at P12 per share in exchange for 90% outstanding shares of Subsidiary
Company on January 1, 2021. The fair value and book value of Subsidiary's
identifiable assets and liabilities were the same except inventory which was
understated by P30,000 and equipment which was overstated by P90,000
(remaining useful life of 10 years). The stockholders' equity of Parent and
Subsidiary at the date of acquisition were as follows:
Parent
Subsidiary
Share Capital
600,000
250,000
Share Premium
450,000
50,000
Retained Earnings
260,000
600,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F86819b3f-1cec-4d49-b0e6-2cf70e7807d9%2F75d5a7ab-3145-47ba-917e-cc8b206cd799%2Fpuyc6v_processed.png&w=3840&q=75)
Transcribed Image Text:1. Parent Company issued 75,000 new shares of its P5 par value ordinary shares
valued at P12 per share in exchange for 90% outstanding shares of Subsidiary
Company on January 1, 2021. The fair value and book value of Subsidiary's
identifiable assets and liabilities were the same except inventory which was
understated by P30,000 and equipment which was overstated by P90,000
(remaining useful life of 10 years). The stockholders' equity of Parent and
Subsidiary at the date of acquisition were as follows:
Parent
Subsidiary
Share Capital
600,000
250,000
Share Premium
450,000
50,000
Retained Earnings
260,000
600,000
![The parent opted to measure NCI using fair value method. During the year, Parent
sold merchandise to Subsidiary for 600,000 while the Subsidiary also sold
merchandise to Parent for P250,000. 20% of the intercompany sales are still in the
ending inventory of the purchasing company. Parent and Subsidiary used the same
mark-up on cost: 25% for intercompany sales and 40% for other sales. At the end of
December 31, 2021, the goodwill was determined to be impaired by P22,500 (partial).
Below is the result of operations in 2021:
Parent
Subsidiary
Net Income
550,000
300,000
Dividend declared and paid
100,000
50,000
How much is the Consolidated Shareholders' Equity at December 31, 2021?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F86819b3f-1cec-4d49-b0e6-2cf70e7807d9%2F75d5a7ab-3145-47ba-917e-cc8b206cd799%2F4z3xpb_processed.png&w=3840&q=75)
Transcribed Image Text:The parent opted to measure NCI using fair value method. During the year, Parent
sold merchandise to Subsidiary for 600,000 while the Subsidiary also sold
merchandise to Parent for P250,000. 20% of the intercompany sales are still in the
ending inventory of the purchasing company. Parent and Subsidiary used the same
mark-up on cost: 25% for intercompany sales and 40% for other sales. At the end of
December 31, 2021, the goodwill was determined to be impaired by P22,500 (partial).
Below is the result of operations in 2021:
Parent
Subsidiary
Net Income
550,000
300,000
Dividend declared and paid
100,000
50,000
How much is the Consolidated Shareholders' Equity at December 31, 2021?
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