How much is the Consolidated Net Income?
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Questions:
a. How much is the Consolidated Net Income?
b. Using the same problem, how much is the
c. Using the same problem, how much is the Consolidated Shareholders’ Equity at December 31, 2022?
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- Parent Company issued 80,000 new shares of its P10 par value ordinary shares and paid cash of P2,000,000 for the 80% interest of Subsidiary Company on January 2, 2022. The share of Parent was valued at P15. The stockholders’ equity of Parent and Subsidiary at the date of acquisition were as follows (see image below).The fair value and book value of Subsidiary’s identifiable assets and liabilities were the same except for inventory which was undervalued by P50,000 and Equipment which was underdepreciated by P100,000 with remaining useful life of 10 years. The parent elected to measure NCI using fair value method. At the end of December 31, 2022, Parent reported a net income of P300,000 and paid dividends of P50,000 while Subsidiary reported a net income of P200,000 and paid dividends of P20,000 to Parent. Only 75% of the beginning inventory of Subsidiary was sold during the period. It was also determined that the goodwill was impaired and to be reported at P800,000. a. How much is the…P Company acquired the net assets of S Company by issuing 150,000 shares of its P10 par value ordinary share capital on July 1, 2021. The market value of the shares was P12. P also paid direct costs of P100,000 which includes P15,000 cost of issuing and registering new shares. The financial statements of P and S were (see image below). The fair value and book value of S Company's identifiable assets and liabilities were the same except Equipment which was undervalued by P250.000 and lInventory which was overvalued by P100,000. Assuming that P Company is an SME. How much is the goodwill/gain on bargain purchase? " P S Cash Inventory Equipment Other Assets 150,000 320,000 4,350,000 500,000 5,320,000 120,000 400,000 1,750,000 500,000 2,770,000 Total Accounts Payable Notes Payable Share Capital, P10 par 1,000,000 1,300,000 2,000,000 1,000,000 20,000 5,320,000 300,000 660,000 500,000 100,000 1,210,000 2,770,000 Share Premium Retained Earnings TotalOn January 1, 2020, Parent Company issued 10,000 shares of its P5 par ordinary share capital for all the 5,000 issued and outstanding shares of Subsidiary Company’s P1 par share capital. The market value of the share was P10. Parent also incurred acquisition related cost amounting to P20,000 including cost of issuing and registering new shares of P10,000. On this date, the shareholder’s equity of Subsidiary was: Ordinary Share Capital - 5,000; Paid-In Capital in excess of par - 30,000; and Retained Earnings - 50,000. The journal entry to record the business combination should include: A. A debit of P20,000 to the Business Combination Expenses B. A debit of P10,000 to the Share Premium C. A credit of P100,000 to the Ordinary Share Capital D. A debit of P50,000 to the Ordinary Share Capital
- On January 1, 2020, Parent Company issued 10,000 shares of its PS par ordinary share capital for all the 5,000 issued and outstanding shares of Subsidiary Company's P1 par share capital The market value of the share was P10. Parent also incurred acquisition related cost amounting to P20,000 including cost of issuing and registering new shares of P10,000. On this date, the shareholder's equity of Subsidiary was: Ordinary Share Capital - 5,000; Paid-in Capital in excess of par-30,000; and Retained Earnings - 50,000. The journal entry to record the business combination should include: A. Debit of 20,000 to the Business Combination Expenses B. Debit of 50,000 to the Ordinary Share Capital C. Debit of 10,000 to the Share Premium D. Credit of 100,000 to the Ordinary Share CapitalPARENT Corporation acquired 80% of the outstanding shares of SUBSIDIARY Company on June 1, 2022 for P3,517,500. SUBSIDIARY Company’s stockholder’s equity components at the end of this year are as follows; Ordinary shares, P100 par, P1,500,000. Share premium P675,000 and Retained Earnings P1,335,000. Non-controlling interest is measured at fair value and the fair value is P705,000. The assets of SUBSIDIARY were fairly valued, except for inventories, which are overstated by P66,000 and equipment, which was understated by P90,000. Remaining useful life of equipment is 4 years. Stockholder’s equity of PARENT on January 1, 2022 is composed of Ordinary shares P4,500,000, Share premium P1,050,000, Retained Earnings P3,150,000. Goodwill, if any, should be written down by P85,350 at year-end. Net Income for the first year of parent is P450,000 and the net income of subsidiary from the date of acquisition is P255,000. Dividends declared at the end of the year amounted to P120,000 and P90,000 for…Acquirer Company issued new shares of its P5 par value ordinary shares valued at P12 per share in exchange for 90% outstanding shares (P2 par value) of Acquiree Company on March 31, 2022. The fair value and book value of Acquiree’s identifiable assets and liabilities were the same except inventory which was understated by P30,000 and equipment which was overstated by P90,000. The financial statements of Acquirer and Acquiree were (see image below).Acquirer incurred the following costs: Legal fees – P11,200; Audit fees for SEC registration of share issue - P5,000; Brokerage fee - P2,500; and Accountant fee for pre-acquisition audit – P15,000. The parent opted to measure NCI using proportionate share and the business combination resulted to a goodwill of P99,000. Answer the following: a. How much is the Consolidated Assets? b. How much is the Consolidated Equity? c. How many is the Number of Shares Issued?
- P Company acquired all the outstanding shares of S Company by issuing 50,000 shares with a par value of P100 on July 1, 2021. P's ordinary shares were selling at P102 per share at the date of acquisition. On the same date, the net asset of S had a carrying value and fair value of P3,800,000 and P4,500,000 respectively. Out of pocket expenses of the business combination were as follows (see image below). How much is the amount charged to expense? Legal fees for contract of business combination Audit fees for SEC registration of share issue Brokerage fee Accountant fee for pre-acquisition audit Printing and registration of stock certificates Other direct costs of acquisition 41,200 50,000 22,500 35,000 10,000 16,800 General administrative costs 25,000 12,100 Listing fees in issuing new sharesSubsidiary Company had common stock of P350,000 and retained earnings of P490,000. Parent Inc. had common stock of P700,000 and retained earnings of P980,000. On January 1, 2021, Parent issued 26,000 shares of common stock with a P12 par value and a P30 fair value for all of Subsidiary's outstanding common stock. Acquisition related cost such as legal fees and finder's fees amounted to P150,000. This combination was accounted for as an acquisition. Immediately after the combination, what was the consolidated net assets?On January 2, 2022, Parent Company purchased 90% of the outstanding shares of Subsidiary Company by paying P300,000. On this date, Subsidiary had Share Capital and Retained Earnings amounting to P150,000 and P230,000 respectively. Also, on this date, an equipment was undervalued by P20,000 with remaining useful life of 10 years. On the same date, Parent had P1,000,000 of Share Capital and P700,000 of Retained Earnings. The parent opted to measure the NCI using proportionate share. Parent and Subsidiary reported the following for the year ended December 31, 2022 (see image below).On July 31, 2022, Parent sold a machinery with a 5-year remaining useful life costing P1,500,000 with accumulated depreciation of P1,000,000 for P530,000 to Subsidiary. Questions: a. How much is the Net Income Attributable to Parent? b. How much is the Net Income Attributable to NCI? .......
- Petron Company issued 80.000 new shares of its P5 par value ordinary shares valued at P12 per share in exchange for 100,000 outstanding shares (P2 par value) of Shell Company on March 31, 2021. The fair value and book value of Shell's identifiable assets and liabilities were the same except Inventory which was overstated by P50.000 and Equipment which was understated by P100,000. The financial statements of Petron and Shell were (see image below). Petron also agreed to pay P500,000 one year after the acquisition date if the net income of Shell will exceed P10,000,000. The fair value of the contingent consideration is P300,000. Petron incurred the following costs: Finder's Fee - 20,000; Professional Fee - 60,000; Other Indirect Cost - 10,000 and Printing and Registration of Shares - 5,000. How much is the goodwill/gain on bargain purchase if NCI is measured using fair value? Petron Shell 75,000 160,000 200,000 1,675,000 2,110,000 60,000 200,000 250,000 875,000 1,385,000 Cash Accounts…Parent Corporation acquired 80% of the outstanding shares of Subsidiary Company on June 1, 2021 for P3,517,500. Subsidiary Company’s stockholder’s equity components at the end of this year are as follows: Ordinary shares, P100 par, P1,500,000, Share premium P675,000 and Retained Earnings P1,335,000. Non-controlling interest is measured at fair value and the fair value is P705,000. The assets of Subsidiary Company were fairly valued, except for inventories, which are overstated by P66,000, and equipment, which was understated by P90,000. Remaining useful life of equipment is 4 years. Stockholder’s equity of Parent Corporation on January 1, 2021 is composed of Ordinary shares P4,500,000, Share premium P1,050,000, Retained Earnings P3,150,000. Goodwill, if any, should be written down by P85,350 at year end. Net Income for the first year of parent is P450,000 and the net income of Subsidiary Company from the date of acquisition is P255,000. Dividends declared at the end of the year…On January 2, 2022, Parent Company purchased 90% of the outstanding shares of Subsidiary Company by paying P300,000. On this date, Subsidiary had Share Capital and Retained Earnings amounting to P150,000 and P230,000 respectively. Also, on this date, an equipment was undervalued by P20,000 with remaining useful life of 10 years. On the same date, Parent had P1,000,000 of Share Capital and P700,000 of Retained Earnings. The parent opted to measure the NCI using proportionate share. Parent and Subsidiary reported the following for the year ended December 31, 2022 (see image below).On July 31, 2022, Parent sold a machinery with a 5-year remaining useful life costing P1,500,000 with accumulated depreciation of P1,000,000 for P530,000 to Subsidiary. Questions:a. How much is the Consolidated Retained Earnings at December 31, 2022? b. How much is the Consolidated Net Income? .....