Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 1 On December 31, 2015, P Company purchased 70 percent of the outstanding shares of S Company at a cost of P423,250.On that date,

Problem 1

On December 31, 2015, P Company purchased 70 percent of the outstanding shares of S Company at a cost of P423,250.On that date, S Company had P145,000 worth of share capital and P362,500 worth of accumulated profits.

For 2016, P Company had income of P290,000 from its own operations and paid dividends of P145,000.S Company, on the other hand reported income of P43,500 and paid dividends of P29,000.All assets and liabilities of S Company have book values approximately equal to their market values.

The beginning inventory of P Company includes P8,000 of merchandise purchased from S Company on December 31, 2015 at 150 percent of cost.The ending inventory of P Company includes P13,050 worth of merchandise purchased from S Company at the same mark-up. P Company uses the FIFO inventory costing. P Company uses the cost method to account for its investment is S Company.

Required:

  1. Compute the consolidated net income for 2016.
  2. Compute the Non-controlling Interest in Net Income of Subsidiary for 2016.

Problem 2

On January 5, 2008, Grace Co. purchased 70% of the outstanding shares of Leo Co. at a cost of P500,000.On that date, the outstanding ordinary shares of Leo had a P700,000 balance, while accumulated profits had a P100,000 balance.All the book values of assets and liabilities of Leo approximated their fair values except for an equipment which was understated by P50,000

For the year 2008, Grace sold an equipment to Leo reporting a gain on sale of P25,000 on July 1, 2008 and Leo on the other hand sold a machine to Grace reporting a loss of P10,000 on October 1, 2008. Grace reported net income of P250,000 and declared dividends of P40,000 and reported an accumulated profits balance as of December 31, 2008 of P350,000.Leo reported net income for the year of P150,000 and declared dividends of P20,000. The remaining useful lives of the plant assets as of January 1, 2008 for both companies are 4 years for machinery and 5 years for equipment.

Required:

From the above data, determine:

  1. The net income attributable to equity holders of the parent for 2008.
  2. The non-controlling interest net income in Leo Co. for 2008.
  3. The consolidated net income of Grace Co. for 2008.
  4. The consolidated accumulated profits as of December 31, 2008.

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_2

Step: 3

blur-text-image_3

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

Rockford Practice Set To Accompany Intermediate Accounting

Authors: Donald E. Kieso

16th Edition

1119287936, 9781119287933

More Books

Students also viewed these Accounting questions

Question

2. Value-oriented information and

Answered: 1 week ago

Question

1. Empirical or factual information,

Answered: 1 week ago

Question

1. To take in the necessary information,

Answered: 1 week ago