REQUIREMENT NO. 1 ONLY

Parent acquired 85 of the outstanding common stock of Subsidiary on January 1 , 205 for P1,357,150. On this date, Subsidiary's common stock and retained earnings balances were P1,000,000 and P300,000, respectively. The fair values of Subsidiary's net assets were equal to their values except for a patent, which had a book value of P63,000, a fair value of P42,000, and a remaining life of 7 years. Financial statements for both companies as of December 31 , 20x8, are presented below: (non-controlling interest is measured as a direct percentage of the fair value of Subsidi ADDITIC - During 20x8, Subsidiary sold merchandise costing P280,000 to Parent for P340,000. The 208 ending inventory of Parent consisted of 30% of the 208 intercompany transfer of merchandise. The 208 beginning inventory of Parent consisted of unconfirmed gross margins of P27,000 in intercompany transfers of merchandise. During the year 208, Subsidiary purchased P600,000 of merchandise from Parent. Parent sells merchandise to all customers at 25% above cost. Subsidiary's beginning and ending inventories for 208 contained P120,000 and P190,000, respectively, merchandised purchased from Parent. On June 20x6, Subsidiary sold land costing P42,000 to Parent for P30,000. On November 20,208, Parent sold land costing P17,000 to subsidiary for P24,000. On July 2, 20x6, Parent sold Subsidiary equipment that had cost Parent P300,000. At the time of the equipment sale, accumulated depreciation was P170,000. Subsidiary paid P270,000 for the equipment; its estimated remaining life is seven years. Straight-1ine method is used. On January 1,208, Subsidiary sold Parent equipment that had cost subsidiary P700,000. At the time of the equipment sale, accumulated depreciation was P350,000. Paren: paid P325,000 for the equipment; its estimated remaining life is five years. Straight-line depreciation is used. For each of the following requirements, prepare the CORRECT: 1. Worksheet necessary for the consolidation of the 208 financial statements; 2. Complete Eliminating entries; 3. Consolidated 208 financial statements (Income Statement and Balance Sheet). A correct income statement should reflect the consolidated balances of sales, cost of sales and operating expense. A correct balance sheet will not have an Investment in subsidiary Account in the assets section. Parent acquired 85 of the outstanding common stock of Subsidiary on January 1 , 205 for P1,357,150. On this date, Subsidiary's common stock and retained earnings balances were P1,000,000 and P300,000, respectively. The fair values of Subsidiary's net assets were equal to their values except for a patent, which had a book value of P63,000, a fair value of P42,000, and a remaining life of 7 years. Financial statements for both companies as of December 31 , 20x8, are presented below: (non-controlling interest is measured as a direct percentage of the fair value of Subsidi ADDITIC - During 20x8, Subsidiary sold merchandise costing P280,000 to Parent for P340,000. The 208 ending inventory of Parent consisted of 30% of the 208 intercompany transfer of merchandise. The 208 beginning inventory of Parent consisted of unconfirmed gross margins of P27,000 in intercompany transfers of merchandise. During the year 208, Subsidiary purchased P600,000 of merchandise from Parent. Parent sells merchandise to all customers at 25% above cost. Subsidiary's beginning and ending inventories for 208 contained P120,000 and P190,000, respectively, merchandised purchased from Parent. On June 20x6, Subsidiary sold land costing P42,000 to Parent for P30,000. On November 20,208, Parent sold land costing P17,000 to subsidiary for P24,000. On July 2, 20x6, Parent sold Subsidiary equipment that had cost Parent P300,000. At the time of the equipment sale, accumulated depreciation was P170,000. Subsidiary paid P270,000 for the equipment; its estimated remaining life is seven years. Straight-1ine method is used. On January 1,208, Subsidiary sold Parent equipment that had cost subsidiary P700,000. At the time of the equipment sale, accumulated depreciation was P350,000. Paren: paid P325,000 for the equipment; its estimated remaining life is five years. Straight-line depreciation is used. For each of the following requirements, prepare the CORRECT: 1. Worksheet necessary for the consolidation of the 208 financial statements; 2. Complete Eliminating entries; 3. Consolidated 208 financial statements (Income Statement and Balance Sheet). A correct income statement should reflect the consolidated balances of sales, cost of sales and operating expense. A correct balance sheet will not have an Investment in subsidiary Account in the assets