On January 1, 2018, P Company purchased 6,000 shares of the 7,500 outstanding shares of S Company by payingP700,000. On that date, S Company had P300,000 capital stock and P500,000 of retained earnings. The excess costover book value was attributable to the building with a remaining life of 25 years. All other assets and liabilities of SCompany had book value approximated their fair market value. The fair value of NCI on this date was P175,000. PCompany's retained earnings as of January 1, 2018 was P550,000. The 2018 and 2019 net income and dividendswere as follows:Net incomeDividends2018P340,000150,0002019P440,000250,00020182019P CompanyS CompanyP100,00050,000P150,000100,000On April 1, 2018, S Company sold equipment with a book value of P30,000 to P Company for P60,000. The equipmentis expected to have a remaining useful life of five years from the date of sale.On August 31, 2018, P Company sold machinery with a book value of P40,000 to S Company for P85,000. Themachinery is expected to last for ten years from date of sale.38. Compute for the consolidated net income for 2018 and 2019.2019566,900617,5002018353,700378,0002018382,5002019617,500566,900A.C.В.357,900D.39. Compute for the consolidated retained earnings as of December 31, 2018 and 2019.20192018828,000 1,295,500803,700201920181,318,000 1,765,5001,303,700А.C.В.1,220,600D.1,720,600

Consolidation - On the same date, financial statements are prepared for both the main firm and its…

On January 1, 2018, P Company purchased 6,000 shares of the 7,500 outstanding shares of S Company by paying P700,000. On that date, S Company had P300,000 capital stock and P500,000 of retained earnings. The excess cost over book value was attributable to the building with a remaining life of 25 years. All other assets and liabilities of S Company had book value approximated their fair market value. The fair value of NCI on this date was P175,000. P Company's retained earnings as of January 1, 2018 was P550,000. The 2018 and 2019 net income and dividends were as follows: P Company S Company 2018 P340,000 150,000 Net income 2019 P440,000 250,000 2018 P100,000 50,000 Dividends 2019 P150,000 100,000 On April 1, 2018, S Company sold equipment with a book value of P30,000 to P Company for P60,000. The equipment is expected to have a remaining useful life of five years from the date of sale. On August 31, 2018, P Company sold machinery with a book value of P40,000 to S Company for P85,000. The machinery is expected to last for ten years from date of sale. 38. Compute for the consolidated net income for 2018 and 2019.

On January 1, 2018, P Company purchased 6,000 shares of the 7,500 outstanding shares of S Company by paying P700,000. On that date, S Company had P300,000 capital stock and P500,000 of retained earnings. The excess cost over book value was attributable to the building with a remaining life of 25 years. All other assets and liabilities of S Company had book value approximated their fair market value. The fair value of NCI on this date was P175,000. P Company's retained earnings as of January 1, 2018 was P550,000. The 2018 and 2019 net income and dividends were as follows: P Company S Company 2018 P340,000 150,000 Net income 2019 P440,000 250,000 2018 P100,000 50,000 Dividends 2019 P150,000 100,000 On April 1, 2018, S Company sold equipment with a book value of P30,000 to P Company for P60,000. The equipment is expected to have a remaining useful life of five years from the date of sale. On August 31, 2018, P Company sold machinery with a book value of P40,000 to S Company for P85,000. The machinery is expected to last for ten years from date of sale. 38. Compute for the consolidated net income for 2018 and 2019.

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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On January 2, 2021, E Company acquired 20% of the outstanding ordinary shares of T Company for P700,000.00. This investment gave E Company the ability to exercise significant influence over T Company. The book value of the acquired shares was P600,000.00. The excess of cost over book value was attributed to a depreciable asset which was undervalued on T Company's balance sheet and which had ten years useful life remaining. For the year ended December 31, 2021, T Company reported net income after tax of P180,000.00 and paid cash dividends of P60,000.00 on its ordinary. Income tax rate is 32%. How much is the carrying value of E Company's investment in T Company at December 31, 2021? P678,000.00 P690,000.00 P714,000.00 P717,200.00
On January 2, 2020, Kent Corp. paid 1,600,000 for the purchase of 40% of the ordinary shares of Kara Company. The statement of financial position of Kara at the date of acquisition shows the following information:Assets subject to depreciation (remaining useful life is 8 years) 2,400,000Assets not subject to depreciation 800,000Liabilties 400,000Both book value and fair value are the same for assets not subject to depreciation and liabilities. The fair market value of Karas assets subject to depreciation is 2,720,000. Kara depreciates its assets using the straight-line method. Karas intangibles are amortized over a 20-year period. Net income for the year ended December 31, 2020, is 640,000. It declares and pays dividends of 500,000 in 2020.What amount of the investment cost is attributable to goodwill? a. 480,000 b. 352,000 c. 608,000 d. 128,000
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On January 2, 2022, S Company acquired 80% of the stocks of L Company for P2,000,000. On this date, L Company had P1,000.000 of Share Capital and P800,000 of Retained Earnings. The carrying values of the identifiable assets and liabilities of L are equal to their fair values. During the year. L ships merchandise to S costing P800.000 at 25% above cost. At the end of the year, records show the following: S Company L Company Inv. beg 350,000 120,000 Inv. end 400,000 5,500,000 2,500,000 3,250,000 1,680,000 200,000 Sales Purchases Operating Exp. Dividends paid 650,000 300,000 500,000 350,000 The ending inventory of S includes merchandise from L amounting to P50,000. The reported impairment of goodwill in 2022 is P20,000. The parent opted to measure NCI at fair value. In 2021, S Company sold inventory costing P50,000 to $ Company (90%- owned) for P100,000. By the end of the year, L sold 80% of the inventory. The elimination entries in 2022 would include: a. Credit to Cost of Sales, P100,000…
On January 1, 2011, Pat Corporation paid $400,000 for purchase of Sad Corporation, when Sad'sstockholders" equity consisted of $300,000 capital stock and $200,000 retained earnings. Book valueswere equal to fair values of Sad's assets and liabilities, except for a building and land. The buildinghad a book value of $80,000, a fair value of $120,000, and a remaining useful life of eight years. Theland had a book value of $50,000 and a fair value of $150.000. Required : Calculate goodwill at the date of purchase of Sad Corporation
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On January 1, 2020, P Company purchased 32,000 shares of the 40,000 outstanding shares of S Company at a price of P1,2000,000 with an excess of P30,000 over the book value of S Company’s net assets. P13,000 of the excess is attributed to an undervalued equipment with a remaining useful life of eight years from the date of acquisition and the rest of the amount is attributed to goodwill. For the year 2020, P Company reported a net income of P750,000 and paid dividends of P180,000. While S Company reported a net income of P240,000 and paid dividends to P Company amounting to P39,000. Goodwill has not impaired in 2020. The retained earnings of P Company at the end of 2020 per books is P1,025,000. P Company uses the cost method to account for its investment in S Company. Non-controlling interest is measured at fair market value.What is the non-controlling interest in net assets?a. 339,875b. 337,925c. 334,525d. 336,475
Riverbed Inc acquired 108,000 common shares, which is 25% of the outstanding common shares, of Tahiti Ltd. on January 1, 2023 for $637,200. At the time of purchase, Tahiti Ltd's depreciable assets were undervalued by $35,840. The depreciable assets had a remaining useful life of 5 years with no salvage value. Tahiti Ltd. declared and paid a cash dividend of $0.35 per share on July 31, 2023. Tahiti Ltd. reported $1.3 million as net income on December 31, 2023 for the year ending on this date. Assume that Riverbed Inc. is in a position to exercise significant influence over Tahiti Ltd, and that Riverbed follows IFRS. Prepare all the journal entries for 2023 in the books of Riverbed Inc. relating to above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit…