ABC Corp purchased 95% of the stock of DEF Company on January 2021. On that date, the book value of DEF's net assets approximated fair value. As a result of the purchase, ABC recognized P75,000 worth of goodwill. During 2021, DEF sold inventory to ABC. On December 31, 2021, DEF had unrealized profits on its books of P12,500. By December 31, 2022, the entire inventory left on ABC's books had been sold to outside parties. During 2022, ABC sold inventory to DEF and had P18,750 unrealized profits left on its books at then end of 2022. For 2022, ABC reported operating income of P590,000 and DEF reported net income of P450,000. What is the consolidated net income?

ABC Corp purchased 95% of the stock of DEF Company on January 2021. On that date, the book value of DEF's net assets approximated fair value. As a result of the purchase, ABC recognized P75,000 worth of goodwill. During 2021, DEF sold inventory to ABC. On December 31, 2021, DEF had unrealized profits on its books of P12,500. By December 31, 2022, the entire inventory left on ABC's books had been sold to outside parties. During 2022, ABC sold inventory to DEF and had P18,750 unrealized profits left on its books at then end of 2022. For 2022, ABC reported operating income of P590,000 and DEF reported net income of P450,000. What is the consolidated net income?

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

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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ABC Corp purchased 95% of the stock of DEF Company on January 2021. On that date, the book value of DEF's net assets approximated fair value. As a result of the purchase, ABC recognized P75,000 worth of goodwill. During 2021, DEF sold inventory to ABC. On December 31, 2021, DEF had unrealized profits on its books of P12,500. By December 31, 2022, the entire inventory left on ABC's books had been sold to outside parties. During 2022, ABC sold inventory to DEF and had P18,750 unrealized profits left on its books at then end of 2022. For 2022, ABC reported operating income of P590,000 and DEF reported net income of P450,000. What is the consolidated net income?
On April 1, 2021, BBC Co. acquired a 30% stake in LTI Inc. for $ 100,000. This amount includes $ 40,000 that represents the excess of the fair market value over the book value of the identifiable net assets that LTI Inc. had on its books as of that date. Of this difference of $ 40,000, BBC attributes that $ 15,000 is due to inventory that was sold in its entirety during 2021, and the remaining $ 25,000 is due to goodwill. On the other hand, LTI generated a net income of $ 20,000 for 2021, and paid dividends of $ 2,500 for each quarter. As a consequence of these effects on LTI's books and financial statements, BBC will recognize investment income (or loss) for a. $4,500 b. $1,125 c. $3,450 d. ($10,500)
On January 2, 2019, Upo Co. purchased 75% of the outstanding shares of Napa Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of Napa 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, Upo and Napa reported net income of P350,000 and P200,000 each respectively. Upo’s beginning inventory included merchandise purchased from Napa Company amounting to P39,000 which was sold to them by Napa at a 30% markup, 80% of these goods were sold during the year. Napa, on the other hand, included inventory items which they purchased from Upo Co. amounting to 18,000. These goods were sold by Upo at a 25% markup. 90% of these goods were sold by Napa for the year.What is the Noncontrolling interest's share in the Net income of the subsidiary?
On January 2, 2019, Upo Co. purchased 75% of the outstanding shares of Napa Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of Napa 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, Upo and Napa reported net income of P350,000 and P200,000 each respectively. Upo’s beginning inventory included merchandise purchased from Napa Company amounting to P39,000 which was sold to them by Napa at a 30% markup, 80% of these goods were sold during the year. Napa, on the other hand, included inventory items which they purchased from Upo Co. amounting to 18,000. These goods were sold by Upo at a 25% markup. 90% of these goods were sold by Napa for the year.Compute for the total realized gross profit (from upstream and downstream sales)
On January 2, 2019, Upo Co. purchased 75% of the outstanding shares of Napa Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of Napa 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, Upo and Napa reported net income of P350,000 and P200,000 each respectively. Upo’s beginning inventory included merchandise purchased from Napa Company amounting to P39,000 which was sold to them by Napa at a 30% markup, 80% of these goods were sold during the year. Napa, on the other hand, included inventory items which they purchased from Upo Co. amounting to 18,000. These goods were sold by Upo at a 25% markup. 90% of these goods were sold by Napa for the year. Determine the consolidated net income for 2020.
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On January 1, 2020, Merlo Company acquired 80% of the stocks of Fritzie Company for P2,000,000. On this date, Fritzie Company had P1,000,000 of Capital Stock and P800,000 of Retained Earnings. On this date, the carrying values of the identifiable assets and liabilities of Fritzie Company are equal to their fair values.During the year, Merlo Company ships merchandise to Fritzie Company merchandise amounting to P800,000, which includes 25% gross profit rate. At the end of the year, records show the following: Merlo Company Fritzie CompanyInventories, Jan 1. P350,000 P120,000Inventories, Dec. 31 400,000 200,000Sales 5,500,000 2,500,000Cost of Sales 3,200,000 1,600,000Operating expenses 650,000 300,000Dividends paid 500,000 350,000The ending…
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