On January 1, 2021, Eno Company purchased 80% of Zosi Co's P10 par common stock for P2,437,500. On this date, the carrying value of Zosi's net assets was P2,500,000. The fair value of Zosi's identifiable assets and liabilities approximates their book values except for plan assets (12 years original useful life), purchased Dec 31, 2018, which were P250,000 in excess of the carrying amount. For the year ended December 31, 2021, net income amounted to P475,000 and cash dividends paid was P250,000. In December 31, 2021 consolidated statement of financial position, non-controlling interest should be reported at:
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- During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 lossOn July 1, 2019, GAR Company acquired 800,000 shares of FAR Company at a price of P13 per share. GAR estimated that the price paid include P1.50 premium in order to gain control over FAR Company. On this date, the fair values of FAR Company’s identifiable assets and liabilities and their carrying values are given below: Book Value Fair ValueCurrent assets P2,000,000 P2,000,000Property, plant and equipment 9,000,000 11,000,000Liabilities P3,000,000 Ordinary shares, P5 par 5,000,000 Retained earnings 3,000,000 Determine the amount of goodwill assuming the non-controlling interest is measured at the proportionate share in the net assets:On January 1, 2020, AB Company purchased the net assets of the CD Company by issuing 100,000 shares of its P1 par value stock when the fair value of the stock was P6.20. It was furtheragreed that Honey Mahogany would pay an additional amount on January 1, 2022, if the average income during the 2-year period of 2020-2021 exceeded P80,000 per year. The expected value of this consideration was calculated as P184,000; the measurement period is one year. What amount will be recorded as goodwill on January 1, 2020?A. ZeroB. 100,000C. 180,000D. 284,000
- On December 1, 2020, Stan Lee Company acquired all of Marvel Inc.’s P2,150,000 identifiable assets and P530,000 liabilities. Book values of the Marvel’s assets and liabilities approximate their fair values except for an overvalued fixture. To acquire the net assets of Marvel, Stan issued its own shares of stock with a market value of P1,715,000 plus cash of P375,000.A contingent consideration of P150,000 is established on the date of acquisition. The business combination resulted to a P650,000 goodwill.Assuming Stan had total assets of P4,890,000 and total liabilities of P2,731,000 prior to the combination, how much is the total assets after the business combination if no additional cash payments were made, but expenses were incurred for related costs amounting to P28,000?After the business combination, how much is the increase in the liabilities of Stan?On October 1, 2021, POGI Company purchased 4,000 of the P1,000 face amount, 10% bonds of GANDA Company for P4,462,500 which included accrued interest of P200,000. The bonds which mature on January 1, 2028, pay interest semiannually on January 1 and July 1. The entity used the straight-line method of amortization and appropriately recorded the bonds as financial asset at amortized cost. What is the carrying amount of the bonds on December 31, 2021? Your answerOn January 1, 2019, Put-3-ska Company purchased 80% of the stock of Sheet Company for P316,000. On this date, Sheet Company had ordinary share, share premium, and accumulated profits of P40,000, P120,000, and P190,000, respectively. Put-3-ska Company’s ordinary share amounted to P500,000 and accumulated profits of P200,000.On January 1, 2019, the only tangible assets of Sheet Company that were undervalued were inventory and building. Inventory, for which FIFO is used was worth P5,000 more than its cost. The inventory was sold in 2019. Building, which was worth P15,000 more than book value, has a remaining life of 8 years, and straight-line depreciation is used. Any remaining excess is full goodwill with an impairment for 2019 amounting to P3,000. Sheet Company reported net income of P50,000 and paid dividends of P10,000 in 2019, while the parent’s reported net income amounted to P100,000 and paid dividends of P20,000.Determine the Consolidated net income for 2019.
- On 1 July 2019, BPL Ltd acquired all of the assets and liabilities of HTC Ltd. In exchange for these assets and liabilities, BPL Ltd issued 100 000 shares that at date of issue had a fair value of $4.95 per share. Costs of issuing these shares amounted to $1050. Legal costs associated with the acquisition of HTC Ltd amounted to $1520. The asset and liabilities of HTC Ltd at 1 July 2019 were as follows: Carrying amountFair value Assets: Cash$12 000$20 000 Accounts receivable10 50012 000 Inventory64 00071 000 Equipment 320 000239 000 Accumulated depreciation – equipment(96 000)— Patents240 000270 000 Liabilities: Accounts payable(16 000)(20 000) Debentures(64 000)(69 000) REQUIRED: a. Prepare the acquisition analysis at 1 July 2019 for the acquisition of HTC Ltd by BPL Ltd.On January 1, 2020, Edelyn Corporation acquired 10,000 shares of JKL Company for P500,000. The 10,000 shares are equivalent to 20% interest of the investee. JKL Company reported the following net income or loss: 2020 - P1,000,000 2021 - (P5,000,000) 2022 - P300,000 Requirements: 1. Prepare the necessary journal entries to record the share of income or loss in 2020, 2021, and 2022. 2 What is the carrying value of the investment on December 31, 2020? December 31, 2021? December 31, 2022?Denber Co. acquired 60% of the common stock of Kailey Corp. on September 1, 2019. For 2019, Kailey reported revenues of $810,000 and expenses of $630,000, not including its investment in Denber, and all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $15,000. What is the amount of the noncontrolling interest's share of Kailey's income for 2019? a. $72,000. b. $22,000. c. $66,000. d. $24,000. e. $48,000.
- On 1 July 2019, Brad Ltd acquired all assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1,000. Legal cost associated with the acquisition of Pitt Ltd amounted to $1,200.The assets and liabilities of Pitt Ltd at 1 July 2019 were as follows:Carrying Amount ($) Fair Value ($)AssetsCash 2,000 2,000Accounts receivable 10,000 10,000Inventory 64,000 68,000Equipment 320,000 232,000Accumulated depn - Equipment (96,000) -Patents 280,000 280,000LiabilitiesAccounts payable (16,000) (16,000)Debentures (64,000) (64,000)Required:a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd.b) Prepare the journal entries in the records of Brad Ltd at 1 July 2019.Below are Lebnas Corp.’s 2019 income statement and comparative balance sheet at 12/31/2019 and 12/31/2018. Additional information: On December 31, 2018, Lebnas acquired 25% of Island ’s common stock for $609,000. On that date, the carrying value of Island’s assets and liabilities, which approximated their fair values, was $2,435,000. Island reported income of $319,000 for the year ended December 31, 2019. No dividend income was received by Lebnas on Island’s common stock during the year 2019. During 2018, Lebnas loaned $797,500 to POI , an unrelated company. POI made the first semi-annual principal repayment of $72,500, plus interest at 10%, on December 31, 2018. POI is current on the loan as of December 31, 2019. On January 2, 2019, Lebnas sold equipment costing $145,000, with a carrying amount of $44,950 for cash. On December 31, 2019, Lebnas entered into a finance lease for a new The present value of the annual rental…Pearson Corporation purchased a 20% interest in Dish Company common stock on January 1, 2019 for $300,000. This investment was accounted for using the complete equity method and the correct balance in the Investment in Dish account on December 31, 2021 was $440,000. The original excess purchase transaction included $60,000 for a patent amortized at a rate of $6,000 per year. In 2022, Dish Corporation had net income of $4,000 per month earned uniformly throughout the year and paid $20,000 of dividends in May. If Pearson sold one-half of its investment in Dish on August 1, 2022 for $500,000, how much gain was recognized on this transaction? A) $190,540B) $280,950 C) $610,000D) $438,100