5. On January 2, 2019, U Co.purchased 75% of the outstandingshares of N Co. resulting to agoodwill of P60,000. On that date,the non-cash assets of N Co. whosebook values did not equal their bookvalues were accounts receivablewhich was overstated by P4,500 andequipment with a remaining 5 yearlife on the purchase date which wasunderstated by P50,000. For theyear 2010, U and N reported netincome of P350,000 and P200,000each respectively. U's beginninginventory included merchandisepurchased from N Companyamounting to P39,000 which wassold to them by N at a 30% markup,80% of these goods were sold duringthe year. N, on the other hand,included inventory items which theypurchased from U Co. amounting to18,000. These goods were sold by Uat a 25% markup. 90% of thesegoods were sold by N for the year.Determine the consolidated netincome for 2020. * 6. Using the same information in #5,what is the Noncontrolling interest'sshare in the Net income of thesubsidiary? *Your answer7. Using the same information in #5,compute for the Equity Shareholder'sNet IncomeYour answer8. Using the same information in #5,compute for the total realized grossprofit (from upstream anddownstream sales)

Net income:The net income refers to the amount that is determined after taking care of all the…

Answered: 6. Using the same information in #5,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On June 30, 2021, ABC Corp. purchased a P3,000,000 face valuebonds with P2,925,067.05 cash. The interest rate is 10%, payablesemiannually every June 30 and Dec. 31. The remaining term as ofacquisition date is three years. ABC purchased it for bothcontractual cashflows and trading purpose, and hence initiallydesignated it as FA‐FV‐OCI. The effective interest rate is 11%. Withinthe year 2022, there was a change in the purpose of holding theinvestment to maturity. As of the end of the years 2022 and 2023,the bonds were valued at P2,950,000 and P2,975,000 respectively. What is the compound journal entry to record thereclassification and update the related accounts? Includethe date and explanation.
On June 30, 2021, ABC Corp. purchased a P3,000,000 face valuebonds with P2,925,067.05 cash. The interest rate is 10%, payablesemiannually every June 30 and Dec. 31. The remaining term as ofacquisition date is three years. ABC purchased it for bothcontractual cashflows and trading purpose, and hence initiallydesignated it as FA‐FV‐OCI. The effective interest rate is 11%. Withinthe year 2022, there was a change in the purpose of holding theinvestment to maturity. As of the end of the years 2022 and 2023,the bonds were valued at P2,950,000 and P2,975,000 respectively.1. What is the compound journal entry to record thereclassification and update the related accounts? Includethe date and explanation.
7. On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U’s beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year. Compute for the Equity Shareholder's Net Income
6. On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U’s beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year. What is the Noncontrolling interest's share in the Net income of the subsidiary?
On January 1, 2021, J Company sold equipment at a cost of P700,000 and accumulated depreciation of P300,000. The entity received as consideration P50,000 down and a P500,000 non interest-bearing note due on January 1, 2022. The prevailing rate of interest for a note of this type is 10%. The present value of 1 is 0.7513. How much is the present value of the note on December 31, 2021?
On January 1, 2021, ABC acquired all the assets and assumed all the liabilities of DEF Co. for P4,500,000. Relevant information follows: ASSETS Carrying Value 55,000 800,000 Fair Values 55,C00 Cash Receivable 800,C00 150,000 700,000 3,500,000 150,000 1,555,000 180,C00 750,C00 4,000,C00 200,C00 1,555,0000 Allowance for Doubtful Accounts Inventory Land Goodwill Liabilities DEC Co. has research and development projects with fair value of P100,000. ABC does not intend to use those R&Ds. However, there have been exchange transactions involving the information generated from DEF, but those transactions are infrequent > All fair value adjustments result to temporary differences but do not affect the tax bases of the assets and liabilities. The taxrate is 30%. > ABC incurred P200,000 on general administrative costs of maintaining an internal acquisition department. Compute the goodwill (gain on bargain purchase)?
5. On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U’s beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year. Determine the consolidated net income for 2020.
On October 1, 2020, Beondegi Company purchased as debt investments at fair value through profit or loss, P100,000, 14% bonds of Samjang Company for 99 plus accrued interest and broker’s fees. Interest is paid semi-annually on February 1 and August 1. Broker’s fees incident to this purchase amounted to P500. How much was the total cash payment in the acquisition of the debt investments on October 1, 2020?
PROBLEM IL. On January 1, 2019, William Corp. (qualifies as SME) paid cash of P600,000 for the 80% of the outstanding shares of Kate Company. The carrying value of the assets and liabilities of Kate on January 1, 2019 follow: Accounts Receivable P90,000 Inventory 180,000 Plant & Equipment (net of Accumulated Depreciation of P220,000) 320,000 Goodwill 100,000 Liabilities 120,000 On January 1, 2019, Kate inventory had a fair value of P150,000 and plant & equipment (net) had a fair value of P380,000. Cost of arranging the combination are as follows: legal fees for combination, P30,000; finder's fee, P50,000; other miscellaneous direct costs, P20,000. Net income of William and Kate for 2019 amounts to P158,000 and P60,000, respectively. William received dividend of P18,000 from Kate during 2019. The PPE has original useful life of 10 years and was already held for 4 years as of date of acquisition. 1. On December 31, 2019, what is the consolidated net income? 2. How much is the carrying…
On January 1, 2021, P Corporation purchases from an unrelated person all the outstanding stock of S Corporation for $90,000. S’s balance sheet on the purchase date is as follows: Assets Basis Fair Market Value Cash $ 5,000 $ 5,000 Accounts Receivable 20,000 20,000 Inventory (LIFO) 20,000 40,000 Equipment (accumulated depreciation of $10,000) 30,000 45,000 Total Assets $75,000 $110,000 Liabilities Accounts payable $20,000 $ 20,000 Equity 55,000 90,000 Total liabilities and equity $75,000 $110,000 P properly elects § 338. S’s tax rate is 21 percent. a. What is the aggregate basis of S’s assets after this transaction? b. What is the basis for each individual asset?
On January 1, 2020, William Corp. (qualifies as SME) paid cash of P600,000 for all the outstanding shares of Kate Company. The carrying value of the assets and liabilities of Kate on January 1, 2020 follow:Accounts Receivable P90,000Inventory 180,000Plant & Equipment (net of Accumulated Depreciation of P220,000) 320,000Goodwill 100,000Liabilities 120,000On January 1, 2020 Kate inventory had a fair value of P150,000 and plant & equipment (net) had a fair value of P380,000. Cost of arranging the combination are as follows: legal fees for combination, P30,000; finder’s fee, P50,000; other miscellaneous direct costs, P20,000.Net income of William and Kate for 2020 amounts to P158,000…
January 1, 2020, Teal Company makes the two following acquisitions. 1. Purchases land having a fair value of $270,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $475,832. 2.Purchases equipment by issuing a 7%, 8-year promissory note having a maturity value of $360,000 (interest payable annually). The company has to pay 12% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Teal Company for the two purchases on January 1, 2020. (b) Record the interest at the end of the first year on both notes using the effective-interest method.

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