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CHAPTER 17

Correction in; Exercise 11 requirement b) What is the increase (decrease) in the investment
Multiple Choice no. 8. Bond matures January 1, 2011.

EXERCISES
1. a) Pet Corp. Stuart Corp.
Jan. 1 Cash 950,000 Investment in Bonds 285,000
Bond Discount 50,000 Cash 285,000
Bonds Payable 1,000,000
July 1 Bond Interest Exp. 40,000 Cash (40,000 x 30%) 12,000
Cash 40,000 Bond Interest Income 12,000
Dec. 31 Bond Interest Exp. 40,000 Bond Int. Receivable 12,000
Bond Interest Payable 40,000 Bond Int. Income 12,000
Bond Interest Expense 12,500 Investment in Bonds 3,750
Bond Discount 12,500 Bond Int. Income 3,750
c. Updating Investment account of Pet Corp:
Investment in Stocks, Stuart Corp. 400,000
Investment from Subsidiary 400,000
b.Trial Balance:
Parent Subsidiary
Bonds Payable P1,000,000 Investment in Bonds P288,750
Bond Discount 37,500 Bond Interest Income 27,750
Bond Interest Expense 92,500 Bond Interest Receivable 12,000
Bond Interest Payable 40,000
Income from Subsidiary 400,000
d. Adjustment and elimination entries involving Bond Transactions:
Bonds Payable 300,000
Bond Discount 11.250
Investment in Bonds 288,750
Bond Interest Income 27,750
Bond Interest Expense 27,750
Bond Interest Payable 12,000
Bond Interest Receivable 12,000
Income from Subsidiary 400,000
Investment in Stocks 400,000
Share Capital 112,500
RE 200,000
GW (100/80%) 125,000
Investment in Stocks 350,000
NCI (350/80%x20%) 87,500
e. 1. Parents Income P 800,000 2. NCI 1/1/ P87,500
Income from Subsidiary 400,000 Shares in NCI 100,000
Share in CNI P1,200,000 NCI 12/31 P187,500
Share of NCI 500,000 x 20% 100,000
CNI P1,300,000
3. Constructive Gain or Loss none
4. Consolidated Interest Expense (92,500 27,750) P 64,750
5. Consolidated Bonds Payable (1,000,000 300,000) P700,000
6. Consolidated Bond Interest Payable (40,000 12,000) P 28,000
7. Consolidated Bond Interest income P 0
8. Consolidated Bond Interest Receivable P 0
Exercise 2
a) Parent Subsidiary
Jan. 1 Cash 950,000 Investment in Bonds 301,000
Bond Discount 50,000 Cash 301,000
Bonds Payable 1,000,000
July 1 Bond Interest Expense 40,000 Cash 12,000
Cash 40,000 Bond Interest Income 12,000
Dec. 31 Bond Interest Expense 40,000 Bond Int. Receivable 12,000
Bond Int. Payable 40,000 Bond Int. Income 12,000
Bond Interest Expense 12,500 Bond Interest Income 250
Bond Discount 12,500 Investment in Bonds 250
b) Inv. in Stocks, Stuart 40,000
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Inc. from Subs. 40,000 (500,000 net income x 80%)
Income from Subsidiary 16,000
Investment in S Co 16,000 Const loss 950,000 x 30#= 285,000 vs 301,000
Investment in S Co. 4,000
Inc. from Subsidiary 4,000 Piecemeal realization 16,000 / 4
Investment balance is P738,000

Trial Balance:
Bonds Payable P1,000,000 Investment in Bonds P300,750
Bond Discount 37,500 Bond Interest Income 23,750
Bond Interest Expense 92,500 Bond Interest Receivable 12,000
Bond Interest Payable 40,000
Income from Subsidiary 400,000
c. Working Paper entries:
Income from Subsidiary 388,000
Investment in Stocks 388,000
Share Capital 112,500
Retained Earnings 200,000
Goodwill 125,000
Investment in S Co 350,000
NCI 87,500
Bonds Payable 300,000
Bond Interest Income 23,750
Loss on Bond Retirement 16,000
Bond Discount 11,250
Investment in Bonds 300,750
Bonds Interest Expense 27,750
12,000
Bond Interest Payable
Bond Interest Receivable 12,000
d. Consolidated:
Net Income (800,000 +500,000-16,000+4,000) P128,800
Constructive Loss P16,000
Interest Income 0
Interest Expense (92,500 x 70%) P64,750
Bonds Payable (1,000,000 x 70%) P700,000
Bond Interest Receivable 0
Bond Interest Payable (40,000 x 70%) P28,000
Bond Discount 26,250
NCI (87,500+100,000*) 187,500
*no share in constructive loss being a downstream sale
Exercise 3.
Share in Net Income (750,000 x 80%) 600,000
Piecemeal realization 4,000
Income from Subsidiary 596,000
Pet Stuart
a) Bonds Payable 1,000,000 Investment in Bonds 300,500
Bond Discount 25,000 Bond Interest Income 23,750
Bond Interest Expense 92,500 Bond Interest Receivable 12,000
Bond Interest Payable 40,000
Income from Subsidiary 596,000
b) Income from Subsidiary 596,000
Investment in Bonds 596,000
Bonds Payable 300,000
Investment in Stocks 8,000
Bond Discount 7,500
Investment in Bonds 300,500
Bond Interest Income 23,750
Investment in Stocks 4,000
Bond Interest Expense 27,750
Bond Interest Payable 12,000
Bond Interest Receivable 12,000
c) Consolidated:
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Net Income (1,000,000 + 596,000) P1,596,000
Share of NCI (750,000x20%) in NI 150,000
NCI (187,500+150,000) 337,500
Bond Interest Expense (92,500, x 70%) P 64,750
Bond Interest Payable (40,000 x 70%) P 28,000
Bond Discount (25,000 x 70%) P 17,500
Bond Payable (1,000,000 x 70%) P700,000
Exercise 4.
PAT / PARENT SMILEY / SUBSIDIARY
a) Investment in Bonds(503150-450*) P502,250 Bonds Payable P1,000,000
Bond Interest Income 22,050 Bond Discount 7,500
Bond Interest Receivable 22,500 Bond Interest Expense 92,500
*3,150/3.5=900x1/2=450 Bond Interest Payable 45,000
b) 991,250* / 2 P495,625
Purchase price 503,150
Constructive Loss at purchase date P( 7,525)
*990,000+(10,000/4x1/2)=991,250
c) Share in Net Income P80,000
Downward Adjustment (7,525-1075*) 80% ( 5160)
Income from Smiley P74,840
*7525/3.5=2,150x1/2=1,075
Investment 1/1 750,000
Share in NI 74,840
Investment 12/31 824,840
d) Working Paper Entries
Income from Subsidiary 74,840
Investment in Stocks 74,840
Share Capital, S Co.
Retained Earnings, S Co. 900,000
Goodwill 300,000
Investment 750,000
NCI 180,000

Bonds Payable 500,000


Bond Interest Income 22,050
Loss on Bond Retirement 7,525
Bond Discount 3,750
Bond Interest Expense 23,125
Investment in Bonds 502,700
Bond Interest Payable 22,500
Bond Interest Receivable 22,500
e) NCI 1/1 P180,000
Share in CNI: (100,000-6,450)20% 18,710
P198,710
f) Loss on Bond Retirement P 7,725
Bonds Payable 500,000
Bond Discount 3,750
Bond Interest Expense 69,375
Bond Interest Payable 22,500
Exercise 5:
a ) Investment in Bonds 501,800 d)1. Income from Subsidiary 321,720
Bond Int. Receivable 22,500 Dividend 120,000
Bond Int. Income 44,100 Investment in Stock 201,720

Book of Smiley 2. SHE 1,000,000


Bonds Payable 1,000,000 Goodwill 30,000
Disc. in Bonds Payable 5,000 Investment 830,000
Bond Int. Payable 45,000 NCI 200,000
Bond Int. Exp. 92,500
3. Bonds Payable 500,000
Bonds Interest Income 44,100

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b) Peacemeal Realization P2,150 Investment in Stock 5,160*
NCI 1,290*
c) Investment 1/1 824,340 *net const loss x 80% & 20%
Share in NI 320,000 Investment in Bonds 501,800
Piecemeal 1,720 Discount on BP 2,500
Dividend Share (120,000) Bond Int. Expense 46,250
Investment 12/31 P1,026,060
Income fr Subsidiary P 321,720 e) Bonds Payable,net 497,500
Bonds Int. Expense 46,250
Bonds Interest Payable 22,500
Bond Interest Receivable 22,500
f) NI of P Co. & S Co. 1,000,000
Income from Subsidiary (321,720)
Peacemeal 2,150
CNI 680,430
Share of NCI (80,430)
Share of P Co. 6,000,000
Exercise 6.
a) Interest paid (400,000 x .10) of 40,000 less premium amortization (12,000/4) of 3,000= Bond
Interest Expense 12/31 P37,000
Interest received (240,000 x .10 x ) or 12,000 add discount amortization (15,000/3.5 x ) of
2,143= balance of Interest Income 12/31 of P14,143
b) Carrying value 7/1 (400,000+10,500) x 60%= 246,300
Acquisition Price 225,000
Gain on constructive bond retirement 21,300
Less piecemeal realization 21,300/3.5 x ) 3,043
Net gain on constructive bond retirement 18,257
c) Premium Amort recorded (9,000/3)= P3,000 x x 60%= 900
Discount Amortization recorded (240,000-225,000 /3.5 /2) = 2,143
Thus: 3,000 x x 60% or 900 + 2,143= 3043
Conideration/Implied value of firm 1,125,000 900,000 225,000
Subsidiary interest 1,100,000 880,000 220,000
Goodwill 25,000 20,000 5,000
Dividend Income 120,000
Dividends, Sogood Co 120,000
Share Capital, Sogood 800,000
Ret. Earnings, Sogood 300,000
Goodwill 25,000
Investment in Sogood Stocks 900,000
NCI 225,000
Bonds Payable 400,000 x 60% 240,000
Bond Premium 9,000 x 60% 5,400
Bond Interest Income 14,143
Bond Interest Expenses 37,000 x x 60% 11,100
Bond Investment 227,143
Constructive Gain on Bond Retirement 21,300
f) Consolidated Income Statement and Retained Earnings
Sales (2,680,000 +1,980,000) 4,660,000
Other Income (266,000 14,143) 251,857
Constructive Gain 21,300
Expenses (2,678,000 + 1,000,000) (3,678,000)
Other Expenses (580,000 11,100) ( 568,900)
Consolidated Net Income 686,257
NCI 20% of ( 400,000 + 18,257) 83,651
Share of Precy in CNI 602,606
Retained Earnings, 1/1 480,000
Dividends (250,000)
Consolidated Retained Earnings, 12/31 832,606

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Statement of Financial Position
Current Assets 1,380,000
Other Assets 3,765,457
Goodwill 25,000
Total 5,170,457
Bonds Payable (400,000 240,000) 160,000
Premium on Bonds Payable (9,0005,400) 3,600
Other Liabilities (2,154,600 + 141,0000 2,295,600
Share Capital 1,600,000
Retained Earnings 832,606
NCI (225,000 + 83,651 30,000) 278,651
Total 5,170,457
g) Investment in Sogood Stocks
1/1 900,000
Share in NI (400,000 x80%) 320,000 Share in dividends
Share in net constructive (150,000 x 80%) 120,000
Gain (18,257 x 80%) 14,606

12/31 balance 1,114,606


Income from Subsidiary
Share in Net income 320,000
Share in net const gain 14,606

12/31 balance 334,606


h) To prove:
Net income from operation P268,000
Income from subsidiary 334,606
Share of Precy in CNI P602,606
i)
Net income (350,000 + 250,000) P600,000
Dividend Income (120,000)
Bond interest income ( 14,143)
Bond interest expense 11,100
Gain on bond retirement 21,300
Consolidated net income P498,257
Share of NCI (250,000 + 18,257) x 20% ( 53,651)
Share of Precy P444,606
2011
a) Premium amortization 9,000/3= 3,000
Discount amortization 240,000-225,000= 15,000/3.5= 4,286
Piecemeal amortization 3,000 x 60%- 1,800 + 4,286= 6,086

b) b)Dividend Income 80,000


Dividends, Sogood Co 80,000

Investment in Sogood 214,606


Ret Earnings, Beg. Precy 334,606-120,000 214,606

Share Capital, Sogood 800,000


Ret. Earnings, Sogood 1/1/11 550,000
Goodwill 25,000
Investment in Sogood Stocks 1,100,000
NCI 275,000

Bonds Payable 400,000 x 60% 240,000


Bond Premium 6,000 x 60% 3,600
Bond Interest Income 28,286
Bond Interest Expenses 37,000 x 60% 22,200
Bond Investment (227,143 + 4,286) 231,429
Investment in Stocks (18,257 x 80%) 14,606
NCI (18,257 x 20%) 3,651
c) Consolidated Income Statement and Retained Earnings
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Sales (2,500,000 +1,520,000) 4,020,000
Other Income (120,000 28,286) 91,714
Expenses (2,400,000 + 720,000) (3,120,000)
Other Expenses (550,000 22,200) ( 528,800)
Consolidated Net Income 463,914
NCI 20% of (250,000- 6,086) 48,783
Share of Precy in CNI 415,131
Retained Earnings, 1/1 832,606
Dividends (200,000)
Consolidated Retained Earnings, 12/31 1,047,737
Statement of Financial Position
Current Assets (920,000+550,000) 1,470,000
Other Assets (2,416,571 + 1,500,000) 3,916,571
Goodwill 25,000
Total 5,411,571
Bonds Payable (400,000 240,000) 160,000
Premium on Bonds Payable (6,000-3,600 2,400
Other Liabilities (2,150,000 + 144,000) 2,294,000
Share Capital 1,600,000
Retained Earnings 1,047,737
NCI (278,651 +48,783 20,000) 307,434
Total 5,411,571

d)
Investment in Sogood Stocks
1/1 1,114,606 Piecemeal realization
Share in NI (250,000 x.8) 200,000 (6,086 x 80%) 4,869
Share in dividends
(100,000 x 80%) 80,000

12/31 balance 1,229,737


Income from Subsidiary
Share in piecemeal 4,869 Share in Net income 200,000

12/31 balance 195,131


e) To prove:
Net income (300,000-80,000) P220,000
Income from subsidiary 195,131
Share of Precy in CNI P415,131
f)
Net income (450,000 +350,000) P800,000
Dividend Income (80,000)
Bond interest income ( 28,286)
Bond interest expense 22,200
Consolidated net income P713,914
Share of NCI (350,000 6,086) x 20% ( 68,783)
Share of Precy P645,131
\

Exercise 7
a) Investment Balance, Jan 1, 2010 P 435,000
Share in Net Income (150,000 x 80%) 120,000
Share in Dividends ( 64,000)
Investment Balance, Dec. 31, 2010 P491,000
Investment Balance, 1/1 P491,000
Share in Net Income (220,000 x 80%) 176,000
Share in Dividends (100,000 x 80%) ( 80,000)
Investment Balance, 12/31/11 P587,000
b) Proceeds from Sale P150,000
Carrying Value of Investment sold (587,000 x 2/8) (146,750)
Gain P 3,250

c) Investment ((587,000x3/4) P440,250


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Share in NI (250,000x60%) 150,000
Share in Dividend (250,000x60%) (72,000)
Investment P518,250
Exercise 8
a) Investment Balance, 12/31/11 P587,000
Share in NI (20,000 x 4/12 x 80%) 66,667
Investment Balance, 5/1/12 P653,667
b) Proceeds from Sale P150,000.00
Carrying Value of Investment Sold (653,667x2/8) 163,417.00
Loss 13,417.00
c) Investment Balance, 5/1/12 P653,667.00
Sale of Investment (163,417.00)
Share in NI (20,000 x 8/12 x 60%) 88,000.00
Share in Dividends (100,000 x 60%) ( 60,000.00)
Investment Balance, 12/31/12 P518,250.00

Exercise 9
Percent of ownership 8,000/40,000= 20%

a) a) Share in NI (160 ,000x20%) P 32,000


Investment cost 128,000
Investment Dec. 31, 04 160,000
b) Investment Balance P160,000
Income from Subsidiary(80,000 x 20%) 16,000
176,000
Additional Investment 232,000
Income from Subsidiary (160,000* X =80,000 x 60%) 48,000
Gain from Business Combination 132,000
Remearsurement of investment (60,000)
Dividends (40,000 x 60%) (24,000)
Investment Balance, 12/3112 P504,000
*Ret Earnings 12/31 P 440,000
Dividends 40,000
Retained Earnings 1/1 (320,000)
Net Income P 160,000

100% 60% 40%


Consideration/Implied Value 668,000 348,000* 320,000
Subsidiary Interest 800,000 480,000 320,000
Gain on Bargain Purchase (132,000 (132,000) 0
* 232,000/40% = 580,000x60%

July 1 Investment 232,000


Cash 232,000
Revaluation Loss/APIC 60,000
Investment in S Co 60,000
232,000+176,000= 408,000
Fair Value 348,000
Loss 60,000
c) Working Paper Entries:
Income from Subsidiary 196,000*
Dividends 24,000
Investment in Stocks *(80,000x20%) 172,000
+(80,000x60%)+132,000 Gain

Common Stock 400,000


Retained Earnings 320,000
Pre-Acquisition 80,000
Investment In Stocks 348,000
Gain 132,000
NCI 320,000

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NCI 7/1/ 320,000
Share in NI 32,000
Dividends (16,000)
NCI 12/31/12 P336,000

Exercise10.
a) Revised Ownership Interest
68,000 / 100,000 = 68%
Table 1.1.11 100% 60% 40%
Consideration/Implied Value 2,000,000 1,200,000 800,000
Subsidiary Interest 1,600,000 960,000 640,000
Goodwill 400,000 240,000 160,000
Table 1/1/12 68% 32%
Implied Value/Consideration 3,040,000 2,067,200 972,800
(update SHE) 2,640,000 1,795,200 844,800
Retain GW 4,000,000 2,720,000 128,000

Original (1,200,000+264,000) 1,464,000


Additional (30x20,000) 600,000
2,064,000
3,040,000x68% 2,067,200
APIC 32,000

Investment in Saymo 603,200


Cash 600,000
APIC 3,200

Exercise 11
a) Before Revised
60% 48,000 / 100,000 = 48% = Deconsolidate
b)
Investment before the sale P1,200,000 +(60%x4,000,000) 1,464,000
Remeasure base on revised SHE 48,000 x P30 1,440,000
Decrease by 24,000
Loss 24,000
Investment in S Co. 24,000

d) Investment 1/1/12 P1,464,000


Remeasure (24,000)
500,000 x 48% 240,000
P1,680,000
Exercise 12
Original vs Revised = Retained
a) 48/80 =60% 68/80 = 80%
b) 100% 85% 15%
3,040,000 2,584,000
2,640,000
400,000
2,584,000 (1,464,000+600,000) = 520,000 credit to APIC
Exercise 13
Original vs Revised = Deconsolidate
a) 60% 28/80 = 35%
b) Cash (20,000 x P32) 640,000
Investment (1,464,000x20/48) 610,000
Gain 30,000

Fair value of remaining shares (28,000 x P32) P896,000


Book value (1,464,000-610,000) 854,000
Gain on Revaluation P 42,000

Or P32 P30.50= P1.50 x 28,000 shares = P42,000

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Exercise 14
Table for Det. & Alloc. Of Excess
100% 80% 20%
Implied Value And Consolidation 2,625,000 2,100,000 525,000
Subsidiary Interest 2,500,000 2,000,000 500,000
Goodwill 125,000 100,000 25,000
Revised SHE: 1/1 3,200,000
TS (300,000)
2,900,000*
CS (2,200,000/10)= 220,000 x 80%= 176,000 shares of Pie stocks
TS 20,000
Outstanding Shares 200,000
Revised % (176,000/200,000)=88%
Table after TS were acquired 100% 88% 12%
Implied Value 3,025,000 2,662,000 373,000
Subsidiary Interest 2,900,000* 2,552,000 (348,000)
Goodwill 125,000 110,000 15,000
Carrying Value of Investment (2,100,000+560,000) = 2,660,000
Fare Value 2,662,000
Increase Thru APIC 2,000
Exercise 15
a) Trade Corporations Entries
Investment in Stocks, Market Corp. 150,000
Cash 150,000
Investment in Stocks, Market Corp. (60,000x70%) 42,000
Income from Subsidiary 42,000
Cash (20,00 x 70%) 14,000
Investment in Stocks, Market Corp. 14,000
Global Corporations Entries:
Investment in Trade 300,000
Cash 300,000
Investment in Stocks, Trade Corp. 113,600
Income from Subsidiary 113,600
100,000 + 42,000 x 80% = P113,600
(100,000 x 80%) + (60,000 x 56%) = P113,600
Cash (60,000 x 80%) 48,000
Investment in Stock, Trade Corp. 48,000
Investment in Stocks 100,000
Income from Subsidiary 100,000

Table for Investment in Trade 100% 80% 20%


400,000 300,000 100,000
500,000 400,000 100,000
(100,000) (100,000) 0
Table For Investment in Market 100% 70% 30%
214,286 150,000 64,286
200,000 140,000 60,000
14,286 10,000 4,286
b) WORKING PAPER ADJUSTMENTS & ELIMINATION
Income from Subsidiary 213,600
Dividends, Trade Corp. 48,000
Investment in Stocks, Trade Corp. 165,600
SHE Trade 500,000
Investment in Trade 300,000
Gain from Bargain Purchase 100,000
NCI 100,000

Income from Subsidiary 42,000


Dividends, Market Corp. 14,000
Investment in Stocks 28,000
Capital Stock, Market Corp.
RE, Market Corp. SHE, Market Corp 200,000
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Goodwill 14,286
Investment in stocks 150,000
NCI 64,286

Exercise 16
East 75% 25% West 90% 10%
3,000,000 2,250,000 750,000 1,444,444 1,300,000 144,444
3,000,000 2,250,000 750,000 1,400,000 1,260,000 140,000
GW 44,444 40,000 4,444

Books of South
Investment in East 2,250,000
Cash 2,250,000
Investment in West 450,000
Cash 450,000
Investment in East 292,500
Income from Subsidiary 292,500
Investment in West 45,000
Income from Subsidiary 45,000
Cash 150,000
Investment in East 150,000
Cash 15,000
Investment in West 15,000

Books of East
Investment in West 850,000
Cash 850,000
Investment in West 90,000
Income from Subsidiary 90,000
Cash 30,000
Investment in West 30,000

Working Paper Entries


Income from subsidiary 135,000
Dividend, West 45,000
Investment in West 90,000
Share Capital 1,000,000
Share Premium 200,000
RE 220,000
GW 44,444
Investment in West 1,300,000
NCI 144,444
Income from Subsidiary 292,500
Dividend, East 150,000
Investment 142,500
Share Capital 2,000,000
Share Premium 500,000
RE 500,000
Investment in East 2,250,000
NCI 750,000
MULTIPLE CHOICE
1. Carrying Value (948x6/9) P632,000 2) Total interest incurred P72,000
Market Value 602,000 Less amortization 12,000
Gain P 30,000 Answer A Effective interest 60,000
Eliminate share of S 40,000 (60,000 x 6/9)
For consolidation P 20,000 Answer D

2. 1) CV of Bonds (400,000-8,000)=392,000x20% = 78,400

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Purchase Price 76,000
Gain P24,000 Answer C

2) CV of BP 12/31 (400,000-6,000) = P394,000 Answer A

3) Answer C (2,400-6,000_ = 1,800

4) 400,000x10% = 40,000 Interest Expense


(8,000/4) = 2,000/42,000 x 80% = P33,600 Answer C

3. NCI (240,000-112,000) Answer B P128,000

3. 1. Answer B

3.2. Answer D

4. Income from Subsidiary (240,000 x 8/12 x 40%) P 64,000


(240,000 x 4/12 x 60%) 48,000
P112,000 Answer D

Pre Acquisition Earnings (240,000 x 8/12)= P160,000 Answer A

NCI (240,000-160,000) X 40%= P32,000 Answer E

5. P1,000,000/P100= 10,000 shares x 40% interest= 4,000 + 2,000 addtl.= 6,000


6,000 / (10,000 + 2,000) = 50% Answer A
Acquisition Cost P 400,000
Subsidiary interest before acquisition:
2,100,000 x 40%= P 840,000
Subsidiary interest after acquisition:
2,500,000 x 50%= P1,250,000
Subsidiary interest acquired P410,000
Excess of book value over cost P 10,000 Answer B
Investment Cost Jan 1, 2002 P800,000
April 1 dividends (60,000 x 40%) ( 24,000)
Sept 1 share in net income (240,000 x 8/12 x 40%) 64,000
Oct 1 addtle acquisition 400,000
Oct 1 dividends (60,000 x 50%) ( 30,000)
Dec 31 share in net income (240,000 x 4/12 x 50%) 40,000
Investment balance Dec 31, 2002 P1,250,000 Answer E
Non Controlling Interest (240,000 x 8/12 x 60%)
6. Acquisition cost P675,000
Subsidiary interest (700,000 x 90%) (630,000)
Pre-acquisition earnings(100,000 x x 90%) ( 45,000)
Excess 0
2) Acquisition cost P675,000
Dividends (50,000 x 90%) ( 45,000)
Share in net income (100,000 x x 90%) 45,000
Share in net income (80,000 x x 90%) 36,000
Investment balance 7/1/2011 P711,000
Sold 10% interest ( 79,000)
Dividends (30,000 x 80%) ( 24,000)
Share in net income (80,000 x x 80%) 32,000
Investment balance Dec 31, 2012 P640,000 Answer A
1)Proceeds from sale P85,000
Book value of sale 79,000
Gain P 6,000 Answer A

3) NCI in CNI (100,000 x x 10%) P 5,000

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(80,000 x x 20%) 8,000
P13,000 Answer E

7.
Investment 1/1/10 P250,000
Net Income (30,000+50,000)80% 64,000
Dividends (25,000+25,000)80% (40,000)
CV 1/1/12 274,000
Proceeds 300,000
Gain 26,000 Answer E

8.
CV of Bonds 948x6/9 = 632,000
FV of Purchase 602,000
Gain 30,000 Answer A
Interest Payment 72,000
Amortization (12,000)
Effective 60,000
X 3/9
20,000 Answer D

9. 1. Answer B
2. Answer D

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