4) At the beginning of 2022, Starling Inc. acquired an 80% interest in Orchard Corporation when the book values of identifiable net assets equalled their fair values. On December 26, 2025, Orchard declared dividends of P 50,000, and the dividends were unpaid at year-end. Starling had not recorded the dividend receivable at December 31. A consolidated working paper entry is necessary to A enter P 50,000 dividends receivable in the consolidated balance sheet. B. enter P 40,000 dividends receivable in the consolidated balance sheet. C. reduce the dividends payable account by P 40,000 in the consolidated balance sheet. D. eliminate the dividend payable account from the consolidated balance sheet. 5) Pigeon Corporation acquired a 60% interest in Home Company on January 1, 2022, for P 70,000 cash when Home had Capital Stock of P60,000 and Retained Earnings of P40,000. All excess purchase cost was attributable to equipment with a 10-year (straight-line) life. Home suffered a P10,000 net loss in 2022 and paid no dividends. At year-end 2022, Home owed Pigeon P12,000 on account. Pigeon's separate income for 2022 was P150,000. Consolidated net income for 2022 was C. P140,000. A. P135,800. B. P136,800. D. P 138,333. 6) When consolidating a subsidiary under the equity method, which of the following statements is true subsequent to the year of acquisition? A. All net assets are revalued to fair value and must be amortized over their useful lives. B. Only net assets that had excess fair value over book value when acquired by the parent must be amortized over their useful lives. C. All depreciable net assets are revalued to fair value at date of acquisition and must be amortized over their useful lives. D. Only depreciable net assets that have excess fair value over book value must be amortized over their useful lives. Items 7 - 9: On January 2, 2022, Phillips Corporation purchase 80% of Signage Company's outstanding shares for P648,000. P30,000 of the excess is attributable to goodwill and the balance to an equipment with an economic life of ten years. Non-controlling interest is measured at its fair value on date of acquisition. On the date of acquisition, stockholders' equity of the two companies were as follows: Ordinary shares Phillips Corporation P1,050,000 1,560,000 Signage Company P 240,000 420,000 Retained earnings On December 31, 2022, Signage Company reported net income of P105,000 and paid dividends of P36,000 to Philips. Philips reported from its separate operations of P285,000 and paid dividends of P138,000. Goodwill had been impaired and should be reported at P6,000 on December 31, 2022,