Straight Problem 1 (Intercompany Sales - Inventory) Par Corporation acquired 80% of the outstanding voting stock of Sub Company on January 1, 2014, for P420,000 in cash and other consideration. At the acquisition date, Par assessed Sub's identifiable assets and liabilities at a collective net fair value of P525,000 and the fair value of the 20% non-controlling interest was P105,000. No excess par value over book value amortization accompanied the acquisition The following selected account balances are from the individual financial records of these two companies as of December 31, 2015: Par Sub Sales P640,000 P360,000 Cost of goods sold 290,000 197,000 Operating expenses 150,000 105,000 Retained earnings, 1/1/2015 740,000 180,000 Inventory 346,000 110,000 Buildings (net) 358,000 157,000 Investment income Not given 0 1. Assume that Par sells Sub inventory at a markup equal to 40% of cost. Intercompany transfers were P90,000 in 2014 and P110,000 in 2015. Of this inventory, Sub retained and then sold P28,000 of the 2014 transfers in 2015 and held P42,000 of the 2015 transfers until 2016. Required: On consolidated financial statements for 2015, determine the balances that would appear for the following accounts: a. Cost of goods sold b. Inventory C. Controlling interest in Consolidated net income d. Non-controlling interest in sub's net income e. Consolidated net income 2. Assume that Sub sells inventory to Par at a markup equal to 40% of cost. Intercompany transfers were P50,000 in 2014 and P80,000 in 2015. of this inventory, P21,000 of the 2014 transfers were retained and then sold by Par in 2015, whereas P35,000 of the 2015 transfers were held until 2016. On consolidated financial statements for 2015, determine the balances that would appear for the following accounts a. Cost of goods sold b. Inventory C. Controlling interest in Consolidated net income d. Non-controlling interest in sub's net income e. Consolidated net income Straight Problem 1 (Intercompany Sales - Inventory) Par Corporation acquired 80% of the outstanding voting stock of Sub Company on January 1, 2014, for P420,000 in cash and other consideration. At the acquisition date, Par assessed Sub's identifiable assets and liabilities at a collective net fair value of P525,000 and the fair value of the 20% non-controlling interest was P105,000. No excess par value over book value amortization accompanied the acquisition The following selected account balances are from the individual financial records of these two companies as of December 31, 2015: Par Sub Sales P640,000 P360,000 Cost of goods sold 290,000 197,000 Operating expenses 150,000 105,000 Retained earnings, 1/1/2015 740,000 180,000 Inventory 346,000 110,000 Buildings (net) 358,000 157,000 Investment income Not given 0 1. Assume that Par sells Sub inventory at a markup equal to 40% of cost. Intercompany transfers were P90,000 in 2014 and P110,000 in 2015. Of this inventory, Sub retained and then sold P28,000 of the 2014 transfers in 2015 and held P42,000 of the 2015 transfers until 2016. Required: On consolidated financial statements for 2015, determine the balances that would appear for the following accounts: a. Cost of goods sold b. Inventory C. Controlling interest in Consolidated net income d. Non-controlling interest in sub's net income e. Consolidated net income 2. Assume that Sub sells inventory to Par at a markup equal to 40% of cost. Intercompany transfers were P50,000 in 2014 and P80,000 in 2015. of this inventory, P21,000 of the 2014 transfers were retained and then sold by Par in 2015, whereas P35,000 of the 2015 transfers were held until 2016. On consolidated financial statements for 2015, determine the balances that would appear for the following accounts a. Cost of goods sold b. Inventory C. Controlling interest in Consolidated net income d. Non-controlling interest in sub's net income e. Consolidated net income