Under PFRS 3, the goodwill will be reduced by the impairment in getting the amount of goodwill to be presented in the consolidated financial statement for the subsequent reporting date after the date of acquisition.Required to answer. Single choice.

True

or

False?

In computation of the Non-Controlling Interest in the Net Income of the Subsidiary, the over and under valuation of inventories and depreciable assets are considered.Required to answer. Single choice.

True

or

False

If the carrying value of the net assets of the subsidiary is equal to its fair value, there will be no adjustments in the reported net income of the subsidiary when computing the net income share of the parent from subsidiary.Required to answer. Single choice.

True

or

False?

Dividends received by the parent from the subsidiary is eliminated only if the parent is not an SME.Required to answer. Single choice.

True

or

False

Consolidated net income is the sum of the net income attributable to the parent and non-controlling interest in the net assets of the subsidiary.Required to answer. Single choice.

True

False

Undervaluation of inventories is deducted in the net income of the subsidiary in computing the consolidated net income.Required to answer. Single choice.

True

False

7

7,

To get the Non-Controlling Interest in the Net Assets Subsidiary, dividends declared by the subsidiary to the NCI is added.Required to answer. Single choice.

True

False

Non-Controlling Interest in the Net Assets Subsidiary is a component of the equity of the consolidated entity.Required to answer. Single choice.

True

or

False

When the equipment of the subsidiary is identified to be undervalued at the date of acquisition, the net income of the subsidiary is not anymore adjusted for such effect in calculating the consolidated net income.Required to answer. Single choice.

True

or

False

Goodwill is amortized for ten years under both the PFRS 3 and PFRS for SMEs.Required to answer. Single choice.

True

or

False

Problem 1

Father Corporation acquired an 70% interest in Son Corporation on January 1, 2021 for P280,000. On this date, the shareholders equity of Father and Son were P500,000, and P325,000, respectively.

The assets and liabilities of the subsidiary were equal to their fair values when Father acquired 70% interest. The fair value method was used to measure the NCI. Net income and dividends for 2021 for the two companies were as follows: (check the table)

On December 31, 2021, valuation indicates that P4,900 impairment in goodwill (partial) is needed to be record.

Net Income attributable to the owners of the parent on December 31, 2021 is

Problem 1

Father Corporation acquired an 70% interest in Son Corporation on January 1, 2021 for P280,000. On this date, the shareholders equity of Father and Son were P500,000, and P325,000, respectively.

The assets and liabilities of the subsidiary were equal to their fair values when Father acquired 70% interest. The fair value method was used to measure the NCI. Net income and dividends for 2021 for the two companies were as follows: (check the table)

On December 31, 2021, valuation indicates that P4,900 impairment in goodwill (partial) is needed to be record.

Goodwill in the consolidated balance sheet on December 31, 2021 isRequired to answer. Single line text.

Problem 1

Father Corporation acquired an 70% interest in Son Corporation on January 1, 2021 for P280,000. On this date, the shareholders equity of Father and Son were P500,000, and P325,000, respectively.

The assets and liabilities of the subsidiary were equal to their fair values when Father acquired 70% interest. The fair value method was used to measure the NCI. Net income and dividends for 2021 for the two companies were as follows: (check the table)

On December 31, 2021, valuation indicates that P4,900 impairment in goodwill (partial) is needed to be record.

Consolidated Net Income for 2021 isRequired to answer. Single line text.

Problem 2

On January 1, 2021, Mother Corporation purchase 90% of Daughter Company's ordinary share for P405,000. P20,500 of the excess is attributable to goodwill and the balance to an equipment with remaining useful life of five years. The subsidiary has an accounting policy to depreciate its fixed assets in straight-line method. The non-controlling interest is to be measured at fair value at the acquisition date. Shareholders' equity of the two companies were as follows on this acquisition date: (check the table)

On December 31, 2021, Daughter Company reported net income of P75,000 and paid dividends of P27,000 to Mother. Mother reported income from its own operations of 150,500 and paid dividends of P115,000. Goodwill has been impaired and should be reported at P11,000 on December 31, 2021.

Adjusted Net income of the subsidiary for 2021 isRequired to answer. Single line text.

Problem 2

On January 1, 2021, Mother Corporation purchase 90% of Daughter Company's ordinary share for P405,000. P20,500 of the excess is attributable to goodwill and the balance to an equipment with remaining useful life of five years. The subsidiary has an accounting policy to depreciate its fixed assets in straight-line method. The non-controlling interest is to be measured at fair value at the acquisition date. Shareholders' equity of the two companies were as follows on this acquisition date: (check the table)

On December 31, 2021, Daughter Company reported net income of P75,000 and paid dividends of P27,000 to Mother. Mother reported income from its own operations of 150,500 and paid dividends of P115,000. Goodwill has been impaired and should be reported at P11,000 on December 31, 2021.

NCINIS for 2021 isRequired to answer. Single line text.

(2 Points)

16

16,

Problem 2

On January 1, 2021, Mother Corporation purchase 90% of Daughter Company's ordinary share for P405,000. P20,500 of the excess is attributable to goodwill and the balance to an equipment with remaining useful life of five years. The subsidiary has an accounting policy to depreciate its fixed assets in straight-line method. The non-controlling interest is to be measured at fair value at the acquisition date. Shareholders' equity of the two companies were as follows on this acquisition date: (check the table)

On December 31, 2021, Daughter Company reported net income of P75,000 and paid dividends of P27,000 to Mother. Mother reported income from its own operations of 150,500 and paid dividends of P115,000. Goodwill has been impaired and should be reported at P11,000 on December 31, 2021.

NCINAS at December 31, 2021 isRequired to answer. Single line text.

Problem 2

On January 1, 2021, Mother Corporation purchase 90% of Daughter Company's ordinary share for P405,000. P20,500 of the excess is attributable to goodwill and the balance to an equipment with remaining useful life of five years. The subsidiary has an accounting policy to depreciate its fixed assets in straight-line method. The non-controlling interest is to be measured at fair value at the acquisition date. Shareholders' equity of the two companies were as follows on this acquisition date: (check the table)

On December 31, 2021, Daughter Company reported net income of P75,000 and paid dividends of P27,000 to Mother. Mother reported income from its own operations of 150,500 and paid dividends of P115,000. Goodwill has been impaired and should be reported at P11,000 on December 31, 2021.

Consolidated equity at December 31, 2021 isRequired to answer. Single line text.

Problem 3

P Corporation acquired an interest on S Company on January 1, 2021 for P9,000,000 when S Company's stockholders' equity consisted of P2,500,000 ordinary share capital, P3,000,000 share premium and P2,000,000 positive retained earnings. After the acquisition, the interest of the non-controlling owners is determined to be 40%.

On the date of acquisition, the fair value of S Company's assets is the same as their fair values except for, (1) the inventories (all sold in the year of acquisition), whose carrying value is more than its fair value by P60,000, and (2) depreciable plant assets (with 5 years remaining useful life), whose fair value is more than the carrying value by P100,000.

The value of the NCI is to be measured at fair value. During 2021, P Corporation and S Company reported net income of P280,000 and P150,000. During 2021, P Corporation received a dividend of P90,000 from the subsidiary.

Adjustment to the Net income of the subsidiary related to undervaluation of depreciation expense for 2021 is (Type the absolute value of the amount)Required to answer. Single line text.

Problem 3

P Corporation acquired an interest on S Company on January 1, 2021 for P9,000,000 when S Company's stockholders' equity consisted of P2,500,000 ordinary share capital, P3,000,000 share premium and P2,000,000 positive retained earnings. After the acquisition, the interest of the non-controlling owners is determined to be 40%.

On the date of acquisition, the fair value of S Company's assets is the same as their fair values except for, (1) the inventories (all sold in the year of acquisition), whose carrying value is more than its fair value by P60,000, and (2) depreciable plant assets (with 5 years remaining useful life), whose fair value is more than the carrying value by P100,000.

The value of the NCI is to be measured at fair value. During 2021, P Corporation and S Company reported net income of P280,000 and P150,000. During 2021, P Corporation received a dividend of P90,000 from the subsidiary.

Share of Parent in the Net income of the Subsidiary for 2021 isRequired to answer. Single line text.

Problem 3

P Corporation acquired an interest on S Company on January 1, 2021 for P9,000,000 when S Company's stockholders' equity consisted of P2,500,000 ordinary share capital, P3,000,000 share premium and P2,000,000 positive retained earnings. After the acquisition, the interest of the non-controlling owners is determined to be 40%.

On the date of acquisition, the fair value of S Company's assets is the same as their fair values except for, (1) the inventories (all sold in the year of acquisition), whose carrying value is more than its fair value by P60,000, and (2) depreciable plant assets (with 5 years remaining useful life), whose fair value is more than the carrying value by P100,000.

The value of the NCI is to be measured at fair value. During 2021, P Corporation and S Company reported net income of P280,000 and P150,000. During 2021, P Corporation received a dividend of P90,000 from the subsidiary.

Dividends declared by the subsidiary to the non-controlling interest for 2021 isRequired to answer. Single line text.

Problem 4

Blues Company, an SME, acquired 7,000 shares of the outstanding stock of Clues Company for P2,200,000 on January 1, 2021. Blues Company also paid P20,000 consultation fee for a CPA for business combination, and legal fees of P30,000 related to business combination.

On the date of acquisition, the equity of Clues Company consisted of Share capital of P1,600,000 P160 par and Retained Earnings of P800,000.

The carrying values and fair value of Clues Company's identifiable assets and liabilities are the same. At the reporting date, Blues Company reported net income of P500,000 on its separate statement of income and paid dividends of P200,000 while Clues Company reported net income on its separate statement of income of P300,000 and paid dividends of P5 per share.

The Net income attributable to parent on December 31, 2021 isRequired to answer. Single line text.

Problem 4

Blues Company, an SME, acquired 7,000 shares of the outstanding stock of Clues Company for P2,200,000 on January 1, 2021. Blues Company also paid P20,000 consultation fee for a CPA for business combination, and legal fees of P30,000 related to business combination.

On the date of acquisition, the equity of Clues Company consisted of Share capital of P1,600,000 P160 par and Retained Earnings of P800,000.

The carrying values and fair value of Clues Company's identifiable assets and liabilities are the same. At the reporting date, Blues Company reported net income of P500,000 on its separate statement of income and paid dividends of P200,000 while Clues Company reported net income on its separate statement of income of P300,000 and paid dividends of P5 per share.

The amount of amortization of goodwill for 2021 isRequired to answer. Single line text.

Problem 4

Blues Company, an SME, acquired 7,000 shares of the outstanding stock of Clues Company for P2,200,000 on January 1, 2021. Blues Company also paid P20,000 consultation fee for a CPA for business combination, and legal fees of P30,000 related to business combination.

On the date of acquisition, the equity of Clues Company consisted of Share capital of P1,600,000 P160 par and Retained Earnings of P800,000.

The carrying values and fair value of Clues Company's identifiable assets and liabilities are the same. At the reporting date, Blues Company reported net income of P500,000 on its separate statement of income and paid dividends of P200,000 while Clues Company reported net income on its separate statement of income of P300,000 and paid dividends of P5 per share.

The non-controlling interest in the net asset of subsidiary on December 31, 2021 isRequired to answer. Single line text.

Problem 5

Ben Corporation, an SME, acquired 90% of the outstanding ordinary shares of Tin Company on July 1, 2021 for P800,000.

Tin Company's shareholder's equity at the end of 2021 is composed of the following: Ordinary shares, P25 par, P250,000; Share premium, P100,000; and Retained earnings, P250,000.

All the assets of Tin were fairly valued, except for equipment, which is overstated by P30,000. Remaining useful life of equipment is 5 years.

Shareholder's equity of Ben on January 1, 2021 is composed of the following: Ordinary shares, 800,000; Share premium, P250,000; and Retained earnings, P750,000.

Net income for the first year of parent and subsidiary are P150,000 and P85,000 (from date of acquisition), respectively. Dividends declared by the parent and subsidiary at the end of the year amounted to P30,000 and P20,000, respectively.

How much is the adjustment on the reported net income of the subsidiary for 2021? (Type the absolute value of the amount)Required to answer. Single line text.

Problem 5

Ben Corporation, an SME, acquired 90% of the outstanding ordinary shares of Tin Company on July 1, 2021 for P800,000.

Tin Company's shareholder's equity at the end of 2021 is composed of the following: Ordinary shares, P25 par, P250,000; Share premium, P100,000; and Retained earnings, P250,000.

All the assets of Tin were fairly valued, except for equipment, which is overstated by P30,000. Remaining useful life of equipment is 5 years.

Shareholder's equity of Ben on January 1, 2021 is composed of the following: Ordinary shares, 800,000; Share premium, P250,000; and Retained earnings, P750,000.

Net income for the first year of parent and subsidiary are P150,000 and P85,000 (from date of acquisition), respectively. Dividends declared by the parent and subsidiary at the end of the year amounted to P30,000 and P20,000, respectively.

What is the amount of non-controlling interest in net assets of subsidiary as of December 31, 2021?Required to answer. Single line text.

Problem 5

Ben Corporation, an SME, acquired 90% of the outstanding ordinary shares of Tin Company on July 1, 2021 for P800,000.

Tin Company's shareholder's equity at the end of 2021 is composed of the following: Ordinary shares, P25 par, P250,000; Share premium, P100,000; and Retained earnings, P250,000.

All the assets of Tin were fairly valued, except for equipment, which is overstated by P30,000. Remaining useful life of equipment is 5 years.

Shareholder's equity of Ben on January 1, 2021 is composed of the following: Ordinary shares, 800,000; Share premium, P250,000; and Retained earnings, P750,000.

Net income for the first year of parent and subsidiary are P150,000 and P85,000 (from date of acquisition), respectively. Dividends declared by the parent and subsidiary at the end of the year amounted to P30,000 and P20,000, respectively.

How much is the Consolidated Retained Earnings as of December 31, 2021?Required to answer. Single line text.

Problem 5

Ben Corporation, an SME, acquired 90% of the outstanding ordinary shares of Tin Company on July 1, 2021 for P800,000.

Tin Company's shareholder's equity at the end of 2021 is composed of the following: Ordinary shares, P25 par, P250,000; Share premium, P100,000; and Retained earnings, P250,000.

All the assets of Tin were fairly valued, except for equipment, which is overstated by P30,000. Remaining useful life of equipment is 5 years.

Shareholder's equity of Ben on January 1, 2021 is composed of the following: Ordinary shares, 800,000; Share premium, P250,000; and Retained earnings, P750,000.

Net income for the first year of parent and subsidiary are P150,000 and P85,000 (from date of acquisition), respectively. Dividends declared by the parent and subsidiary at the end of the year amounted to P30,000 and P20,000, respectively.

What is the amount of consolidated equity at the end of the year?Required to answer. Single line text.

Problem 6

P Corporation paid P2,000,000 for 75% interest in S Company on January 1, 2021. The stockholders' equity accounts of S Company included share capital of P1,000,000 and retained earnings of P725,000. Of the excess of the sum of the purchase price and NCI over book value, P125,000 is attributable to undervalued inventories (all sold in 2021) and the remainder to goodwill. S's net income for the year is P450,000 and P's net income is P1,150,000. Dividends received by P from S for the year amounted to P75,000. Both P Corporation and S Company are SMEs.

How much is the balance of NCI at the end of 2021?Required to answer. Single line text.

Problem 6

P Corporation paid P2,000,000 for 75% interest in S Company on January 1, 2021. The stockholders' equity accounts of S Company included share capital of P1,000,000 and retained earnings of P725,000. Of the excess of the sum of the purchase price and NCI over book value, P125,000 is attributable to undervalued inventories (all sold in 2021) and the remainder to goodwill. S's net income for the year is P450,000 and P's net income is P1,150,000. Dividends received by P from S for the year amounted to P75,000. Both P Corporation and S Company are SMEs.

How much is the Non-controlling interest in the Net Income of the subsidiary for 2021?Required to answer. Single line text.

Problem 6

P Corporation paid P2,000,000 for 75% interest in S Company on January 1, 2021. The stockholders' equity accounts of S Company included share capital of P1,000,000 and retained earnings of P725,000. Of the excess of the sum of the purchase price and NCI over book value, P125,000 is attributable to undervalued inventories (all sold in 2021) and the remainder to goodwill. S's net income for the year is P450,000 and P's net income is P1,150,000. Dividends received by P from S for the year amounted to P75,000. Both P Corporation and S Company are SMEs.

How much is the amortization of goodwill for 2021?Required to answer. Single line text.