On January 1, 2018, Powell Company acquires 80%of the common stock of Scarlett Company for P372,000. At that time, Scarlett Companys shareholders equity is composed of common stock (P10 par), P240,000 and retained earnings, P120,000. Also, the fair value of the non-controlling interest is P98,200. On the same date, the following assets of Scarlett Company had carrying values that were different from their respective fair values:

Other assets and all liabilities of Scarlett Company had carrying values approximately equal to their respective fair values.

On January 1, 2018, the equipment and building had a remaining life of 8 and 4 years, respectively. The inventories of January 1, 2018 were all sold during 2018 and FIFO inventory costing is used. Goodwill, if any, is impaired by P5,000 during 2018. The investment is to be accounted for using the cost method.

Both entities did not issue additional shares during 2018. Trial balances for the legal entities for the year ended 2018 are as follows:

The trial balances for the legal entities for the year ended 2019 are as follows:

2. How much of the goodwill is attributable to the parent and non-controlling interest, respectively?

A. 15,840; 9,160 B. 15,840; 0 C. 84,000; 26,200 D. 191,840; 47,960

4. How much is the consolidated net income for the year 2018?

A. 203,232 B. 211,000 C. 239,800 D. 256,800

6. What amount of dividend revenue shall be presented in the (1) separate income statement and (2) consolidated income statement for the year ended December 31, 2018?

A. 0; 0 B. 28,800; 28,800 C. 28,800; 0 D. 0; 28,800

please show solutions

Inventory Land Equipment, net Building, net Carrying value: 24,000 48,000 84,000 168,000 Fair value: 30.000 55,200 180,000 144,00 Cash Accounts receivable, net Inventory, 12/31/2018 Land Equipment, net Building, net Investment in Scarlett Accounts Payable Bond Payable Common stock, P10 par Retained earnings, 1/1/18 Dividends Sales Dividend revenue Cost of goods sold Operating expense Powell Company Scarlett Company Debit Credit Debit Credit 232,800 90,000 90,000 60,000 120,000 90.000 210,000 48,000 105,000 84.000 315,000 252,000 372,000 120,000 120,000 240.000 120,000 600,000 240,000 360.000 120,000 72,000 36,000 480,000 240,000 28.800 204,000 138,000 108,000 42,000 1.828.800 1.828.800 840.000 840.000 Cash Accounts receivable, net Inventory, 12/31/2019 Trading securities Land Equipment, net Building, net Investment in Scarlett Accounts Payable Bond Payable Common stock, P10 par Retained earnings, 1/1/19 Dividends Sales Dividend revenue Cost of goods sold Operating expense Powell Company Scarlett Company Debit Credit Debit Credit 189,000 102,000 180,000 96,000 216,000 108,000 100,000 50,000 210,000 48,000 90,000 78,000 270,000 234,000 372,000 140,000 200,000 240,000 120,000 600,000 240,000 484,800 144,000 72,000 48,000 540,000 360,000 48,000 5,000 216,000 192,000 137,800 113,000 2.052.800 2.052.800 1.069.000 1.069.000