2. Arkin Corporation acquired 75% of the outstanding shares of Sharp Company on January 2, 2016 for a consideration transferred of P4,320,000. The price paid includes a control premium amounting to P120,000. On the date of acquisition, the related cost of business combination amount to P80,000. On January 2, 2016, Sharp Company's stockholder's equity accounts were: Ordinary Shares-P5,700,000 and Retained Earnings-P1,860,000. An examination of the acquired company's assets and liabilities on the date of acquisition revealed that there were assets with book values different from their fair values. The merchandise inventory of Sharp is overstated by P180,000: Land, which was undervalued by P900,000; Equipment, which was overvalued by P720,000 and Copyright was undervalued by P540,000.

Inventories were all sold in 2016.The equipment had a remaining life of 8 years while copyright had a remaining life of 5 years. During 2016, intercompany sales of merchandise on account amount to P1,980,000 of which P126,000 remains in ending inventory. Likewise, the December 31, 2016 inventory includes P144,000 from downstream sales. The Arkin Corporation's mark-up was 20% of sales while Sharp Company's selling price is at 120% of cost.

On the first day of the second month of the second quarter of 2017, there was an upstream sale of land for P2,700,000. On this date the land was carried on the selling company's books at P2,340,000 an amount which is equal to fair value on the date of acquisition. On the first day of the last month of third quarter of 2017, there was a downstream sale of furniture for P300,000. On this date the furniture was carried on selling company's books net of accumulated depreciation at P210,000. The furniture was estimated to have a remaining life of 5 years on the date of sale. On the first day of the last month of the year 2017, there was an upstream sale of building for P6,720,000. On this date the building was carried on selling company's books, net of accumulated depreciation at P8,160,000, The building was estimated to have a remaining life of 8 years on the date of sale.

During 2017, intercomapany sales of merchandise on account amount to P3,240,000 of which P360,000 is from upstream sales. Likewise, the December 31, 2017 inventory includes P270,000 from downstream sales. The acquirer corporation accounts for its investment account in subsidiary using the cost method. Unconsolidated Statement Of Financial Position as of December 31, 2017 show:

ARKIN COMPANYSHARP COMPANY

CashP3,240,000P1,800,000

Trade Receivable1,020,000960,000

Merchandise Inventory2,640,0001,740,000

Furniture, net720,000540,000

Equipment, net1,140,000660,000

Building, net9,060,0006,540,000

Machinery, net480,000360,000

Land5,880,0003,000,000

Copyright, net660,000240,000

Investment in Sharp Co.4,320,000

Cost of Goods Sold6,900,0002,400,000

Loss on sale of machinery60,000180,000

Loss on sale of building360,0001,440,000

Expenses3,840,0001,620,000

Dividends Declared2,280,0001,920,000

P42,600,000P23,400,000

LiabilitiesP3,930,000P2,700,000

Ordinary Shares11,400,0005,700,000

Retained Earnings, 01/01/177,200,0004,200,000

Sales16,800,0009,600,000

Gain on sale of furniture90,000120,000

Gain on sale of land1,200,000360,000

Dividend Revenue1,980,000720,000

P42,600,000P23,400,000

For 2017 compute for the following items in the consolidated financial statement:

Gross Profit

A. 17,164,200

B. 20,275,800

C. 17,035,800

D. 17,100,000

Expenses

A. 5,460,000

B. 5,487,000

C. 5,433,000

D. 5,469,000

Non-controlling Interest in Profit

A. 1,542,000

B. 1,582,500

C. 1,546,500

D. 1,536,750

Net Income

A. 11,986,800

B. 14,968,800

C. 12,988,800

D. 13,528,800

Non-controlling Interest on Net Assets

A. 3,626,250

B. 3,707,250

C. 3,712,500

D. 3,716,250

Retained Earnings Attributable to Parent's shareholders Equity

A. 16,906,800

B. 18,767,550

C. 20,493,750

D. 18,738,750

2. Arkin Corporation acquired 75% of the outstanding shares of Sharp Company on January 2, 2016 for a consideration transferred of P4,320,000. The price paid includes a control premium amounting to P120,000. On the date of acquisition, the related cost of business combination amount to P80,000. On January 2, 2016, Sharp Company's stockholder's equity accounts were: Ordinary Shares-P5,700,000 and Retained Earnings-P1,860,000. An examination of the acquired company's assets and liabilities on the date of acquisition revealed that there were assets with book values different from their fair values. The merchandise inventory of Sharp is overstated by P180,000: Land, which was undervalued by P900,000; Equipment, which was overvalued by P720,000 and Copyright was undervalued by P540,000.

Inventories were all sold in 2016.The equipment had a remaining life of 8 years while copyright had a remaining life of 5 years. During 2016, intercompany sales of merchandise on account amount to P1,980,000 of which P126,000 remains in ending inventory. Likewise, the December 31, 2016 inventory includes P144,000 from downstream sales. The Arkin Corporation's mark-up was 20% of sales while Sharp Company's selling price is at 120% of cost.

On the first day of the second month of the second quarter of 2017, there was an upstream sale of land for P2,700,000. On this date the land was carried on the selling company's books at P2,340,000 an amount which is equal to fair value on the date of acquisition. On the first day of the last month of third quarter of 2017, there was a downstream sale of furniture for P300,000. On this date the furniture was carried on selling company's books net of accumulated depreciation at P210,000. The furniture was estimated to have a remaining life of 5 years on the date of sale. On the first day of the last month of the year 2017, there was an upstream sale of building for P6,720,000. On this date the building was carried on selling company's books, net of accumulated depreciation at P8,160,000, The building was estimated to have a remaining life of 8 years on the date of sale.

During 2017, intercomapany sales of merchandise on account amount to P3,240,000 of which P360,000 is from upstream sales. Likewise, the December 31, 2017 inventory includes P270,000 from downstream sales. The acquirer corporation accounts for its investment account in subsidiary using the cost method. Unconsolidated Statement Of Financial Position as of December 31, 2017 show:

ARKIN COMPANYSHARP COMPANY

CashP3,240,000P1,800,000

Trade Receivable1,020,000960,000

Merchandise Inventory2,640,0001,740,000

Furniture, net720,000540,000

Equipment, net1,140,000660,000

Building, net9,060,0006,540,000

Machinery, net480,000360,000

Land5,880,0003,000,000

Copyright, net660,000240,000

Investment in Sharp Co.4,320,000

Cost of Goods Sold6,900,0002,400,000

Loss on sale of machinery60,000180,000

Loss on sale of building360,0001,440,000

Expenses3,840,0001,620,000

Dividends Declared2,280,0001,920,000

P42,600,000P23,400,000

LiabilitiesP3,930,000P2,700,000

Ordinary Shares11,400,0005,700,000

Retained Earnings, 01/01/177,200,0004,200,000

Sales16,800,0009,600,000

Gain on sale of furniture90,000120,000

Gain on sale of land1,200,000360,000

Dividend Revenue1,980,000720,000

P42,600,000P23,400,000

For 2017 compute for the following items in the consolidated financial statement:

Gross Profit

A. 17,164,200

B. 20,275,800

C. 17,035,800

D. 17,100,000

Expenses

A. 5,460,000

B. 5,487,000

C. 5,433,000

D. 5,469,000

Non-controlling Interest in Profit

A. 1,542,000

B. 1,582,500

C. 1,546,500

D. 1,536,750

Net Income

A. 11,986,800

B. 14,968,800

C. 12,988,800

D. 13,528,800

Non-controlling Interest on Net Assets

A. 3,626,250

B. 3,707,250

C. 3,712,500

D. 3,716,250

Retained Earnings Attributable to Parent's shareholders Equity

A. 16,906,800

B. 18,767,550

C. 20,493,750

D. 18,738,750