subject: financial accounting LSPU SeatworkConsolidation Subsequent to the Date of AcquisitionProblem SolvingOn January 1, 20x1, Joy Co. acquired 60% interest in Axion, Inc. for P300,000. Information onAxion's financial position on this date follows:●●The identifiable assets and liabilities approximated their fair values except forinventories with carrying amount of P120,000 and fair value of P80,000 and building withcarrying amount of P200.000 and fair value of P250.000, The building has remaininguseful life of 5 years,Axion's equity comprises only share capital and retained earnings with carrying amountsof P250.000 and P40.000, respectively.Non-controlling interest is measured using the proportionate share method.All the inventories on January 1, 20x1 were sold during 20x1. No dividends were declared byeither entity during 20x1. There were also no intercompany transactions. There is also noimpairment of goodwill.The individual financial statements of the entities on December 31, 20x1 are shown below:Statements of financial positionAs at December 31, 20x1ASSETSCashInventory...Investment in subsidiary (at cost).Building netTOTAL ASSETSLIABILITIES & EQUITYAccounts payable...Share capital.Retained earnings...Total equity...Total liabilities and equity...SalesCost of goods sold...Gross profitJoy Co.143.000.440.000300.000560.0001,443,000200,0001,000,000243,0001,243,0001,443,000.Statements of profit or lossFor the year ended December 31, 20x1Joy Co.....3007000(165,000)135,000(40.000)(32.000)63,000Axion Co.60,000160,000160,000380,00070,000250,00060,000310,000380,000Axion Co.120 000(72,000)48,000(10,000)(18,000)20,000Depreciation expense....Distribution costs...Profit for the year.Requirement: Prepare the consolidated financial statements as at December 31,20x1.

On 1st Jan, Joy co. acquired 60% shares of Axion Inc. Thus Joy co. is the holding co of Axion Inc.…

Answered: Requirement: Prepare the consolidated…

Business

Accounting

Requirement: Prepare the consolidated financial statements as at December 31,20x1.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 30E

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