Problem on Intercompany sale of PPE

On January 1, 2021, ABC Co. acquired 75% interest in XYZ Co. for P180,000. On this date, the carrying amount of XYZ Co.net identifiable assets was P160,000 equal to fair value. Non-controlling interest was measured using the proportionate share method.

The financial statements of the entities on December 31, 2021 show the following information:

ABC Co. XYZ Co.

ASSETS

Investment in subsidiary (at cost) 180,000 -

Equipment - net 400,000 190,000

Other assets 200,000 45,000

TOTAL ASSETS 780,000 235,000

LIABILITIES AND EQUITY

Liabilities 70,000 25,000

Share Capital 600,000 100,000

Retained Earnings 110,000 110,000

Total Equity 710,000 210,000

TOTAL LIABILITIES AND EQUITY 780,000 235,000

ABC Co. XYZ Co.

Revenues 300,000 80,000

Depreciation Expenses (40,000) (12,000)

Other Expenses (32,000) (18,000)

Gain oF sale of Equipment 12,000 0

Profit for the year 240,000 50,000

Additional information:

• On January 1, 2021, right after thebusiness combination, ABC Co. sold equipment with a historical cost of P120,000 and accumulated depreciation of P72,000 to XYZ Co. for P60,000. ABC Co. has been depreciating this equipment over a useful life of 10 years using the straight-line method. XYZ Co. decided to continue this accounting policy and depreciate the equipment over its remaining useful life of 4 years.
• No dividends were declared by either entity during 2021 and there is also no impairment of goodwill

Required:

Consolidated statement of financial position and consolidated statement of profit or loss.