ACCOUNTING FOR BUSINESS COMBINATION

ANSWER THE FOLLOWING AND PROVIDE STEP BY STEP EXPLANATION:

Problem 3 The Nathan Company acquired all of the outstanding stock of Caleb Company on January 1, 2014 for P267, 800 cash. Caleb had a book value of only P182, 000 on that date. However, equipment (having an eight-year life) is undervalued by P52, 000 on Caleb's financial records. A building with a 20-year life was overvalued by P13, 000. Subsequent to the acquisition, Caleb reported the following: Net Income Dividends Paid 2014 P 65,000 P 13,000 2015 78,000 52,000 2016 39,000 26,000 In accounting for this investment, Nathan has used the cost method. Selected accounts taken from the financial records of these two companies as of December 31, 2016, are as follows: Nathan Company Caleb Company Revenues - Operating P403,000 P135,200 Expenses 257,400 96,200 Equipment (net) 416,000 65,000 Building (net) 286,000 88,400 Ordinary share 377,000 65,000 Accumulated profits 533,000 208,000Required: Determine the following account balances as of December 31, 2016. 1. Net Income Attributable to Equity Holders of the Parent 2. Non-controlling Interest in Net Income of Subsidiary 3. Consolidated Net Income 4. Consolidated Equipment (net) 5. Consolidated Buildings (net) 6. Consolidated Goodwill (net) 7. Consolidated Ordinary Shares 8. Consolidated Accumulated Prots Problem 4 Joyce Corporation acquired 60 percent ownership of Ria Company on January 1, 2014 for P525, 000. The purchase differential was assignable entirely to a depreciable asset with a remaining economic life of 10 years at the date of acquisition. On that date, the following amounts were reported in the shareholders' equity by Ria Company Ordinary Shares P300, 000 Capital in Excess of par value 150,000 Accumulated prots 300,000 In the consolidated statement of nancial position prepared as of December 31, 2017, the noncontrolling interest was reported at P348, 000. Joyce reported operating income of P150, 000 during the 4year period and paid dividends of P67, 500. Joyce had accumulated prots of P900, 000 on the date of combination. Required: Determine the consolidated accumulated prots as of December 3 l , 2017