The following statement of financial position were prepared for Popoy and Sasha company on

January 1, 2020 just before they entered into business combination:

Popoy Company

Sasha Company

Book Value

Book Value

Fair Value

Cash & Receivable

900,000

160,000

160,000

Inventory

600,000

100,000

130,000

Building 5yrs

1,125,000

300,000

400,000

Eqpt 5yrs

300,000

250,000

200,000

Accnt Payable

450,000

50,000

50,000

Bond Payable

750,000

40,000

40,000

Common Stock

P20 Par Value

750,000

P10 Par Value

200,000

APIC

150,000

50,000

RE

825,000

470,000

On the same day, Popoy purchased 70% common shares outstanding of Sasha for P600,000.

For 4 years ended December 31, Popoy company and Sasha Company reported on their

separate income statement the following results:

Net Income

Popoy

Sasha

2020

262,500

200,000

2021

165,500

115,000

2022

175,000

160,000

2023

255,000

230,000

As Christmas bonus to the stockholders, it is the policy of both the companies to declare dividends

every 25th of December and pay such after 15 days.

Dividends

Popoy

Sasha

2020

50,000

25,000

2021

100,000

50,000

2022

75,000

40,000

2023

80,000

45,000

Additional Information:

The fair value of Non-Controlling interest (30%) is assessed at 250,000

Impairment test shows that goodwill is impaired at 10% yearly starting 2020

Intercompany Sale of Inventory

In 2020 Popoy purchased inventory amounting to P50,000 and sold the 80% to Sasha for

P48,000. Sasha sold the 75% to outsider for 30% gross profit. This transaction is not yet reflected

in the separate income statement of Popoy and Sasha above.

In 2021 Sasha purchased inventory amounting to P50,000 and sold the 80% to Popoy for

P48,000. Popoy sold the 75% to outsider for 30% gross profit. This transaction is reflected already

in the separate income statement of Popoy and Sasha above.

If any, ignore the effect of unrealized/realized profit in ending/beginning inventory for this problem