Question
Direction: Provide what is asked. 1. On January 1, 20x1, Health Co. acquired 70% interest in Wealth Co. The financial statements of the combining entities
Direction: Provide what is asked.
1. On January 1, 20x1, Health Co. acquired 70% interest in Wealth Co. The financial statements of the combining entities right after the business combination are as follows: s Health Co. Wealth Co.
Cash 100,000 20,000
Accounts receivable 120,000 40,000
Inventory 400,000 100,000
Investment in subsidiary 560,000 -
Prepaid assets 30,000 10,000
Building, net 1,200,000 400,000
Total Assets 2,410,000 570,000
Accounts payable 70,000 90,000
Share capital 1,000,000 200,000
Share premium 350,000 50,000
Retained earnings 990,000 230,000
Total liabilities and equity 2,410,000 570,000
The carrying amounts of Wealth's assets and liabilities approximate the acquisition-date fair values, except as follows:;
Carrying amount Fair value
Accounts receivable 40,000 20,000
Building, net 400,000 540,000
Health measured the NCI at "proportionate share"
Requirement: Prepare the consolidated statement of financial position.
2.Pink co. acquired 90% interest in Floyd, Inc. on January 1, 20x1. Information of Jan. 1, 20x1:
Floyd's net identifiable assets have a carrying amount of P 480,000 and fair value of P 600,000. The difference is due to the following: Inventory: Carrying amount is P 100,000; Fair value is P 110,000 Building, net: Carrying amount is P 400,000; Fair value is P 510,000
The remaining useful life of the building is 5 years.
Pink measured the NCI at "proportionate share" Information on December 31, 20x1:
Statement of financial position As of December 31, 20x1
Pink Co. Floyd Co.
Cash 620,000 120,000
Accounts receivable 170,000 100,000
Inventory 200,000 80,000
Investment in subsidiary (at cost) 560,000
Prepaid assets 10,000 8,000
Building, net 1,100,000 350,000
Total Assets 2,660,000 658,000
Accounts payable 50,000 90,000
Share capital 1,000,000 200,000
Share premium 350,000 50,000
Retained earnings 1,260,000 318,000
Total liabilities and equity 2,660,000 658,000
Statements of profit or loss For the year ended December 31, 20x1
Pink Co. Floyd Co.
Sales 600,000 200,000
Cost of goods sold (200,000) (60,000)
Gross profit 400,000 140,000
Depreciation expense (100,000) (50,000)
Distribution costs (30,000) (2,000)
Profit for the year 270,000 88,000
There were no dividends declared, no intercompany transactions and no impairment of goodwill in 20x1.
Requirement: Prepare the December 31, 20x1 consolidated financial statements.
3.Use the information in number 2 except that Pink measured the NCI at a fair value of P 65,000.
Requirement : Prepare the December 31, 20x1 consolidated financial statements.
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