Consolidated Financial Statements

On January 1, 20*6, Parent Company purchased 80 percent of the outstanding shares of Sister Company by paying P700,000. On that date, Sister Company had P300,000 capital stock and P500,000 retained earnings. An undervalued asset attributable to building amounting to P75,000 with a remaining life of 25 years. All other assets and liabilities of Sister Company had book value approximated their fair market value. On January 1, 20X7, Parent's common stock and retained earnings amounted P1,000,000 and P800,000, respectively, while Sister Company's retained earnings is P600,00. The 20X7 net income and dividends using cost (or initial value) model was as follows: Net income Dividends Parent Company P340,000 P100,000 Sister Company P150,000 P50,000 On April 1, 20X7, Sister Company sold equipment with a book value of P30,000 to Parent Company for P60,000. The gain on the sale is included in the net income of Sister Company indicated above. The equipment is expected to have a remaining useful life of five years from the date of the sale. On September 30, 20X7, Parent Company sold machinery with book value of P40,000 to Sister Company for P75,000. The gain on the sale is also included in the net income of Parent Company indicated above. The machinery is expected to last for ten (10) years from the date of sale. 1. The investment in Subsidiary account on December 31, 20X7 (cost model): a. 748,500 b. 725,000 C. 721,600 d. 700,000 2. The Dividend income/Investment income of Parent Company for 20x7: a. 88,500 b. 65,000 C. 61,600 d. 40,000 3. The non-controlling interest in Net Income for 20X7: a. 30,000 b. 25,500 C. 24,900 d. 24,300 4. The Profit attributable to equity holders of parent (Parent's Interest/ Controlling Interest in Profit) for 20X7: a. 356,500 b. 362,200 c. 363,075 d. 386,500 5. The Consolidated / Group Net Income for 20X7: a. 356,500 b. 362,200 c. 363,075 d. 387,375 6. The parent's portion of consolidated (or controlling interest/equity holders of parent) retained earnings on December 31, 20X7: a. 1,040,000 b. 1,063,075 c. 1,123,075 d. 1,140,675 7. The non-controlling interest on December 31, 20X7: a. 208,700 b. 189,300 c. 174,900 d. 173,100