ASSIGNMENT 03 Name: Date: On January 1, 20x4, P Company acquires 80% of the common stock of S Company for P372,000. At that time, the following assets and liabilities of 8 Company had book values that were different from their respective market values: S (:0. {EV} S Co. FV lnventory P24,000 P30,000 Land 48,000 55,200 Equipment 180,000 180,000 Accum. depreciation equipment ...................... (96,000) Buildings ................................................ 360,000 144,000 Accum. depreciation buildings ............................ (192,000) Bonds payable (5 years) .................................... 120,000 1 15,200 All other assets and liabilities had book values approximately equal to their respective fair values. On January 1, 20x4, the equipment and buildings had a remaining life of 4 and 8 years respectively. Inventory is sold in 20x4 and FIFO inventory costing is used. Goodwill, if any, is reduced annually by a P3, 000 impairment loss. The were no intercompany sales prior to 20x4, information resulting from intercompany sales of equipment are summarized below Date of sale Seller Selling Price Orig. Cost Accum. Degr. Remaining Life 411i20x4 P Go. P90,000 P120,000 P45,000 6 years 112120x4 8 Co. 60,000 772,000 43,200 4 years Additional information resulting from intercompany sales, ending inventory and gross prot rates are summarized below: Lear Sales of P Co. to S Co. 1261 Intercomgany Invg of S (:0. Intercomgny Prot on Sales 20x4 P150,000 60% 25% 20x5 120,000 80% 20% Lear Sales of S Co. to P Co. 1231 Intercomgany Invg of P Co. Intercomgny Prot on Sales 20x4 P60,000 50% 20% 20x5 75,000 40% 40% Trial balances for the companies for the year ended December 31, 20x4 are as follows: Debits P (:0. S Co. Cash ...................................................... 232,800 90,000 Accounts receivable 90,000 60,000 lnventory .................. 120,000 90,000 Land .................. 210,000 48,000 Equipment .................. 240,000 1 80,000 Building .................. 720,000 540,000 Investment in S Co. 372,000 Cost of goods sold 204,000 138,000 Depreciation expense 60,000 24,000 Other expenses .................. 48,000 18,000 Dividends paid ...................................................... 72,000 36,000 Totals 2,368,800 1,224,000 Credits Accum. Depreciation equipment ............................. 135,000 96,000 Accum. Depreciation buildings .............................. 405,000 288,000 Accounts payable 105,000 88,800 Bonds payable .................. 240,000 120,000 Common stock, P10 par 600,000 240,000 Retained earnings 360,000 120,000 Sales .................................................................. 480,000 240,000 Gain on sale ofequipment ...................................... 15,000 31,200 Dividend income .......................................... 28,800 Totals 2, 368,800 1,224,000 ASSIGNMENT 03 Trial balances for the companies for the year ended December 31 . 20x5 are as follows: Debits P (:0. S Co. Cash ...................................................... 265,200 1 02,000 Accounts receivable 180,000 96,000 Inventory ................................... 216,000 108,000 Land ................................... 210,000 48,000 Equipment ...................................................... 240,000 1 80,000 Building ...................................................... 720,000 540,000 Investment in S Co. ....................... 372,000 Cost of goods sold ....................... 216,000 192,000 Depreciation expense ....................... 60,000 24,000 Other expenses ................................... 72,000 54,000 Dividends paid ...................................................... 72 000 48,000 Totals 2,623,200 1, 392,000 Credits Accum. Depreciation equipment 150,000 102,000 Accum. Depreciation buildings 450,000 306,000 Accounts payable ....................... 105,000 88,800 Bonds payable ................................... 240,000 120,000 Common stock, P10 par ....................... 600,000 240,000 Retained earnings ....................... 499,800 175200 Sales ............................................... 540,000 360,000 Dividend income .......................................... 38,400 . Totals 2,623,200 1, 392,000 REQUIRED: Using cost model full goodwill method, prepare the consolidated working paper [or the following: a. December 31. 20x4 b. December 31, 20x5