Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Indi Company bought 70.38% of the outstanding common shares of Estrada Co. for cash worth P85,388.21 and Indi Company common shares. On this date, Indi

Indi Company bought 70.38% of the outstanding common shares of Estrada Co. for cash worth P85,388.21 and Indi Company common shares. On this date, Indi Company common shares have a market value of P61.83 a share respectively. Estrada Co. common shares drop to P61.97 per share right after the acquisition. On this date (January 1 2009), Estrada Co.'s stockholders' equity consisted of the following: Share Capital (par 25) 1,066,831.00 Share Premium 1,002,156.26 Retained Earnings 508,521.15 The book values of , Estrada Co.'s assets and liabilities approximate fair value except for the following: Book Value Fair Value Notes Current Assets 1,524,902.78 1,809,963.13 The excess was due to inventory with book value of P100,000. Half was sold in 2010, the rest were deemed obsolete by 2011 and was written off Plant Assets 8,389,009.92 9,638,760.08 The excess was due to two assets: Equiipment with excess of P200,000. It was depreciated using the straightline method for 8 years. Depreciation was always charged to Operating Expenses. Land had an excess of P250,000. The land was subsequently sold to a 3rd party company during 2011. You noted the following details: 1. On January 31 2009, Estrada Co. sold inventory to Indi Company. The cost of inventory is P250,000 on a gross margin on cost of 25%. 10% remains in ending inventory. All remaining inventory were sold to 3rd parties by 2010. 2. On June 30 2009, Estrada Co. bought 2,000, P1,000 face value bonds of Peach from the open market at a yield of 10%. The bonds were initially issued at 12% on January 1, 2009. It pays semiannual coupons pegged at 11%. for the next four years every June 30 and December 31. Estrada Co. intends to hold the investment to maturity 3. On December 31, 2010, Indi Company sold two pieces of equipment to Estrada Co. with a combined purchase cost of P750,000 for P300,000. It was originally depreciated over 8 years when it was bought on June 30, 2005. Estrada Co. estimates useful life of 5 years from December 31, 2009. 4. During 2010, Indi Company sold inventory to Estrada Co.. The intercompany sales were P400,000 on a gross margin of 40%. Only 40% were sold. Three-fourhts of the remaining inventory was sold in 2011. The rest were sold in 2012. 5. During 2010, Estrada Co. sold inventory to Indi Company. The intercompany sales were P200,000 on a gross margin on cost of 25%. Only 75% were sold. The rest were sold in 2011. The following shos the financial statements of Indi Company and Estrada Co. as of/for the period ending December 31, 2011. What is the Consolidated Financial Statements (except for cash flows) as of/for the period ending December 31, 2011. Indi Company Estrada Co. Sales (2,503,002.22) (1,587,418.74) CGS 977,801.12 862,294.06 Opex 221,817.57 182,214.28 Int Exp, net 34,352.17 38,788.62 Other exp, net 374,052.50 255,000.00 Net Income (894,978.86) (249,121.78) STATEMENT OF RETAINED EARNINGS Beg RE (1,187,232.80) (843,206.54) Net Income (894,978.86) (249,121.78) Dividends 109,882.96 27,975.25 End RE (1,972,328.71) (1,064,353.07) Beg NCI Net Income Dividends End NCI BALANCE SHEET Current Assets 2,025,904.93 1,508,170.46 PPE 3,273,792.96 5,009,986.21 Inv in Sub 1,132,456.90 - Other Assets 1,054,244.43 2,618,357.74 GW Total 7,486,399.22 9,136,514.41 Current Liab (1,051,936.26) (1,257,502.28) Bonds Payable (5,535,658.01) (1,717,811.84) Other NCL (398,407.14) (2,153,582.31) Share Capital (1,825,887.38) (1,066,831.00) Share Premium (2,078,996.11) (1,002,156.26) UGL (219,643.19) (100,000.00) RE 3,624,128.86 (1,838,630.73) NCI Total (7,486,399.22) (9,136,514.41)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Multicolumn Journal

Authors: Claudia Gilbertson

11th Edition

1337565423, 9781337565424

More Books

Students also viewed these Accounting questions