14-6: A (At Fair Value at Date of Acquisition) 14-7: D: Total Net Income P1,800,000

Costs of SEC registration P12,000
Cost of issuing stock certificates 3,000

Documentary stamp tax 20,000
Total P35,000
14-6: a (at fair value at date of acquisition)
14-7: d
Abel net income, January to December (P80,000 + P1,320,000) P1,400,000

Cain net income, April to December 400,000
Total net income P1,800,000
14-8: a
Price paid P 800,000

Less: Fair value of net assets acquired
Cash P 160,000
Inventory 380,000
Property, plant and equipment 1,120,000
Liabilities Price paid
P 700,000
Less: Fair value of net assets acquired (P600,000 – P188,000) 412,000
Goodwill P 288,000
Avon’s assets 2,000,000
Bell’s assets at fair value 600,000
Total assets P2,888,000
14-10: c
Debit to expenses:
Broker’s fee P 50,000
Pre-acquisition audit fee 40,000
General administrative costs 15,000
Legal fees for business combination 32,000
Other acquisition costs 6,000
Total P 143,000
Debit to APIC
Audit fee for SEC registration of stock issue P 46,000
SEC registration fee for stock issue 5,000
Total P 51,000
Price paid P2,550,000

Current assets P1,100,000
Plant assets 2,200,000
108
Liabilities ( 300,000) 3,000,000
Total P35,000
14-7: d

14-8: a

Cash P 160,000
Inventory 380,000
P 700,000
Goodwill P 288,000
14-10: c
Debit to expenses:
Total P 143,000
Debit to APIC
Total P 51,000

109
Liabilities ( 300,000) 3,000,000
Total P35,000
14-7: d

14-8: a

Cash P 160,000
Inventory 380,000
P 700,000
Goodwill P 288,000
14-10: c
Debit to expenses:
Total P 143,000
Debit to APIC
Total P 51,000

110
Liabilities ( 300,000) 3,000,000
Liabilities Total P450,000
20-4: a
Depreciation expense (H$ 12,000 x P5.80) P 69,600

Bad debts (H$ 8,000 x P5.80) 46,400
Rent (H$ 20,000 x P5.80) 116,000
Total P232,000
Average rate for the year is used in translating depreciation expense because this is more
reasonable estimation than the rate when the related asset was acquired (P4.80).
CHAPTER 21
MULTIPLE CHOICES - COMPUTATIONAL
21-1 b
21.2 a
21.3 a
21.4 b
21.5 b
21.6 a
21.7 c
21.8 a
21.9 a
21.10 c
21.11 d
21.12 b
21.13 a
21.14 a
20-4: a
111
Bad debts (H$ 8,000 x P5.80) 46,400
Rent (H$ 20,000 x P5.80) 116,000
Total P232,000
CHAPTER 21
21-1 b
21.15 a
21.16 a
21.17 b
21.18 b
21.19 a
21.20 c
21.21 a
21.22 a
21.23 c
21.24 d
21.25 b
21.26 a
21.27 a
20-4: a

Bad debts (H$ 8,000 x P5.80) 46,400
Rent (H$ 20,000 x P5.80) 116,000
Total P232,000
112
CHAPTER 21
21-1 b
21.28 a
21.29 a
21.30 b
21.31 b
21.32 b
21.33 a
21.34 a
Investment in Son, Jan. 1 P310,000 P396,200CHAPTER 18
MULTIPLE CHOICES – COMPUTATIONAL
18-1: a
Equipment – at original cost P500,000
Accumulated depreciation:
Time of sale P250,000
Current depreciation based on
Original cost (P500,000/10 years 50,000 P300,000
18-2: b
CI – Sol P100,000
Unrealized gain on sale of computer, Dec. 31 ( 30,000)
Adjusted CI P 70,000
NCI proportionate share 30%
NCI inCI of subsidiary P 21,000
18-3: b
2012 2013
CI from own operations – Prime P200,000 P250,000
Unrealized gain – Downstream (30,000) __-
Adjusted net income – Prime P170,000 P250,000
Second Company CI 100,000 150,000
113
Consolidated CI P270,000 P400,000
18-4: c
CI – Saw P100,000
Unrealized loss-Upstream 12,000
Realized loss ((P12,000 / 5) x 6/12 ( 1,200)
Adjusted CI – Saw P110,800
NCI in CI of subsidiary (P110,800 x 25%) P 27,700
18-5: c
Equipment – at original cost P1,000,000
18-1: a
18-2: b
CI – Sol P100,000
18-3: b
2012 2013
Adjusted net income – Prime P170,000 P250,000
Second Company CI 100,000 150,000
18-4: c
CI – Saw P100,000
Unrealized loss-Upstream 12,000
114
Realized loss ((P12,000 / 5) x 6/12 ( 1,200)
Adjusted CI – Saw P110,800
18-5: c
18-1: a
18-2: b
CI – Sol P100,000
18-3: b
2012 2013
18-5: c
16-1: c, [(P260,000/80%) x 20%]
16-2: d, consolidated CI will decrease by P6,000 due to amortization of the allocated excess
(P60,000 / 10 years).
16-3: a, because there is no NCI in a wholly owned subsidiary.
115
16-4: c
Investment cost (price paid) P500,000

Less: Book value of interest acquired 480,000
Excess P 60,000
Cost Method Equity Method

Investment cost P500,000 P500,000
Parent’s share of subsidiary’s CI - 120,000
Dividends received from subsidiary - ( 48,000)
Amortization of allocated excess (P60,000/20) - ( 3,000)
Investment account balance, Dec. 31, 2013 P500,000 P569,000
16-5: a
NCI, January 2, 2013 [(P270,000/75%) x 25%] P 90,000

NCI in S Company dividends [(P60,000/75%) x 25%] (16,000)
NCI in S Company CI (P160,000 x 25%) 40,000
NCI balance, December 31, 2013 P114,000
16-6: a
Dividend income (P40,000 x 90%) ( 36,000)
Puno’s CI from own operations 109,000
Salas’ CI from own operations 120,000
Consolidated CI P 229,000
16-7: b
Peter’s CI from own operations P1,000,000

Seller’s CI from own operations 200,000
Consolidated CI 1,200,000
Attributable to NCI (P200,000 x 20%) 40,000
Attributable to parent P1,160,000
16-8: a
2011 2012 2013

Investment in Son, Jan. 1 P310,000 P396,200MULTIPLE
CHOICES - COMPUTATIONAL
16-1: c, [(P260,000/80%) x 20%]
(P60,000 / 10 years).
116
16-4: c

Excess P 60,000

16-5: a
NCI, January 2, 2013 [(P270,000/75%) x 25%] P 90,000

16-6: a
Puno’s CI P 145,000
16-7: b

Attributable to parent P1,160,000
16-8: a
2011 2012 2013

Investment in Son, Jan. 1 P310,000 P396,200MULTIPLE
CHOICES - COMPUTATIONAL
16-1: c, [(P260,000/80%) x 20%]
(P60,000 / 10 years).
117
16-4: c

Excess P 60,000

16-5: a
NCI, January 2, 2013 [(P270,000/75%) x 25%] P 90,000

16-6: a
Puno’s CI P 145,000
16-7: b


Current depreciation (P900,000/10) 90,000 P 450,000
18-6: a
Adjusted CI – Susie (P12,000 / 40%) P 30,000

Add back unrealized gain – Upstream 90,000
CI of Susie – 2013 P120,000
18-7: a
118
Original cost P100,000
Amount debited to Truck account (48,000)
Selling price of the truck – Amount paid P 52,000
18-8: c
CI – Po P200,000
Unrealized gain, Dec. 31 – DS (30,000)
CI from own operation – Po 270,000
CI of So 180,000
Consolidated CI, Dec. 31, 2013 P350,000
Attributable to NCI (P180,000 x 20%) (36,000)
Attributable to parent P314,000
18-9: b
NCI, January 1, 2013 (P1,000,000 x 20%) P 200,000

NCI in dividends paid by subsidiary (P30,000 x 20%) ( 6,000)
NCI in CI of subsidiary (P65,00 x 20%) 13,000
NCI, December 31, 2013 P 207,000
18-10: c
Consolidated CI attributable to parent:

CI – Pink P300,000
Unrealized gain, July 1- Downstream ( 50,000)
Realized gain, Dec. 31 (P50,000 / 10) x 6/12 2,500
Adjusted CI – Pink P252,500
Soda’s adjusted net loss:
Net loss P(40,000)
Unrealized loss, 1/1 – Upstream 15,000
Realized loss, 12/31 (P15,000/5) ( 3,000) (28,000)
18-10, Continued:
Non-controlling interest (NCI)
NCI, January 1, 2013 [(P1,240,000/80%) x 20%) P 310,000
NCI share in dividends paid by subsidiary (P30,000 x 20%) ( 6,000)
NCI in adjusted CI (loss) of subsidiary ( 5,600)
NCI, December 31, 2013 P 298,400
18-11: a
119
Net assets, Dec. 31, 2013
NCI ,Dec. 31, 2013 (based on fair value of net assets) P188,960
Add: NCI share of unrealized profit in ending inventory -Upstream
(P36,000 x 20%) x 20% 1,440
NCI share of unrealized gain on sale of equipment- Upstream
(P60,000 x 20%) – (P12,000 / 5) 9,600
NCI before adjustment P200,000
Net assets – Steve, Dec.31, 2013 (P200,000 / 20%) P1,000,000
Investment in Steve Company stock – Equity method

Investment cost:
Net assets, Dec. 31, 2013 P1,000,000
Less CI – steve
NCI P36,960
NCI share of unrealized profit in ending
Inventory – Upstream 1,440
BCI share of unrealized gain on sale of
Equipment – Upstream 9,600
NCI per book P48,000
Divided by 20% 240,000
Net assets, Jan. 1, 2013 P 760,000
Parent’s proportionate share x 80%
Book value of interest acquired P 608,000
Add: difference 20,000
Add investment income:
Peter’s share of Steve CI (P240,000 x 80%) P 192,000
Unrealized profit in ending inventory – Downstream
(P24,000 x 20%/120%) x 100% ( 4,000)
Unrealized profit in beginning inventory – Upstream
(P36,000 x 25/125%) x 80% ( 5,760)
Unrealized gain on sale of equipment – Upstream
(P48,000 – 9,600) ( 38,400)
Investment in Steve Company, Dec. 31, 2013 P 771,840
18-12: a
CI from own operations – Pipe P400,000

Adjusted CI - Smoker
CI P100,000
Unrealized gain, July 1, 2013 – Upstream (50,000)
Realized gain, Dec. 31, 2013 (P50,000/5)x ½ 5,000 55,000
120
18-13: d
2012 2013
CI from operations – Parent P100,000 P120,000
Adjusted CI of Sub:
CI P 60,000 P 75,000
Unrealized gain – Upstream ( 9,000) -
Realized gain: 2010 (P9,000/3) x ¼ 750
2011 (P9,000/3) - 3,000
Adjusted CI P 51,750 P 78,000
Attributable to NCI (10,350) (15,600)
Attributable to parent P141,400 P182,400
18-14: d
Investment in Sili Company stock – Equity method

Price paid P500,000
Investment income net of dividends – 2009 to 2012:
Increase in earnings (P500,000 – P200,000) x 75% 225,000
Investment income, Dec. 31, 2012:
Share of Sili’s CI (P60,000 x 75%) 45,000
Unrealized gain on sale of land – Downstream (15,000)
Unrealized loss on sale of building – Downstream 10,000
Realized loss on sale of building (P10,000 / 5) x 9/12 ( 1,500) 38,500
Investment income, Dec. 31, 2013:
Share of Sili’s CI (P70,000 x 75%) 52,500
Realized loss (P10,000 / 5) (2,000) 50,500
Dividends received:
2012: (P10,000 x 75%) 7,500
2013: (P20,000 x 75%) 15,000 (22,500)
Investment in Sili Company stock, Dec. 31, 2013 P791,500
18-15: a
Investment in Saw Company stock, Dec. 31, 2013

Price paid P550,000
Investment income – 2007 to 2011:
Increase in earnings (P500,000 – P300,000) x 90% 180,000
Investment income – 2012:
121
Power’s share of Saw CI (100,000 x 90%) P90,000
Unrealized gain – Land (5,000 x 90%) (4,500)
Unrealized loss – Warehouse (20,000 x 90%) 18,000
Realized loss – Warehouse (20,000/2 x 3/12 x 90%) (2,250) 101,250
Investment income – 2013:

Power’s share of Saw’s CI (P120,000 x 90%) P108,000
Realized loss on sale of warehouse (P20,000/2) x 90% (9,000) 99,000
Dividends received:
2012: ( P20,000 x 90%) P 18,000
2013: ( P30,000 x 90%) 27,000 (45,000)
Investment in Saw Company stock account balance 12/31/13 P885,250
PROBLEMS
Problem 18-1
Computation of the missing amounts in the working paper eliminations for P Corporation and S
Company:
(1) P640 (P3,200 x 20%)
(2) P2,560 (P3,200 x 80%)
(3) P1,600 (P800 x 2)
(4) P320 (P1,600 x 20%)
(5) P1,280 (P1,600 x 80%)
(6) P3,200 (P800 x 4)
Problem 18-2
a. Consolidated Comprehensive Income

CI from own operations – P Company P200,000
Unrealized gain on sale of equipment, Dec. 31 – Downstream (30,000)
Adjusted CI – P Co P170,000
S Company CI 180,000
Consolidated net income P350,000
b. NCI in CI of subsidiary (P180,000 x 20%) P 36,000
c. Non-controlling interest (NCI):

NCI, January 1, 2013 [(P720,000/80%) x 20%] P180,000
NCI in dividends paid by subsidiary (P60,000 x 20%) (12,000)
NCI in CI of subsidiary (P180,000 x 20%) 36,000
NCI, December 31, 2013 P204,000
Problem 18-3
Pony Corporation and Subsidiary
122
Consolidated Statement of Comprehensive Income
Year Ended December 31, 2013
Sales (P500,000 + P300,000) P800,000

Gain on sale of machinery (schedule 1) 20,000
Total revenue 820,000
Cost of sales P200,000 + P130,000) 330,000
Gross profit 490,000
Expenses:
Depreciation (P50,000 +P30,000 – P5,000) P 75,000
Other expenses (P80,000 + P140,000) 220,000 295,000
Consolidated comprehensive income 785,000
Attributable to NCI [(P190,000 + P5,000) +10,000) x 25%] (28,750)
Schedule 1:
Selling price – Dec. 28, 2013 P36,000
Book value (P65,000 ÷ 5) x3 26,000
Gain on sale 10,000
Unrealized gain (P25,000 – P15,000) 10,000
Total gain P20,000
Problem 18-4
a. Consolidated Comprehensive Income

CI from own operations – P Company P300,000
Adjusted CI of S Company:
CI – S P150,000
Unrealized gain, 4/1/13 - Upstream ( 30,000)
Realized gain, 12/31/13 (P30,000/5) x 9/12 4,500 124,500
Consolidated CI 424,500
Attributable to NCI (P124,500 x 20%) (24,900)
b. Non-controlling interest (NCI)

NCI, January 1, 2013 [(P800,000/80% x 20%] P200,000
NCI share in dividends paid by subsidiary (P50,000 x 20%) ( 10,000)
NCI in adjusted CI of subsidiary 24,900
NCI, December 31, 2013 P214,900
Problem 18-5
Texas Company and Subsidiary
123
Sales P1,500,000
Cost of goods sold 650,000
Expenses (P200,000 + P100,000 – P8,000 ) 292,000
Consolidated comprehensive income P 558,000
Attributable to parent P 520,500
Adjustment for expenses (depreciation) = P40,000 / 5 years.
Problem 18-6
a. Working Paper Elimination Entries – Dec. 31, 2013
(1) Dividend income 4,000

NCI 1,000
Dividends declared – Jupiter 5,000
To eliminate intercompany dividends
(2) Common stock – Jupiter 100,000

Retained earnings – Jupiter 50,000
Investment in Jupiter Company 120,000
NCI 30,000
To eliminate equity accounts of Jupiter as of the
date of acquisition
(3) Goodwill 40,000

Investment in Jupiter Company 40,000
To allocate excess to goodwill
(4) Retained earnings, Jan. 1 - Vincent 8,000

NCI 2,000
Land 10,000
To eliminate unrealized gain on sale of land – Upstream.
(5) Gain on sale of equipment 20,000

Building and equipment 5,000
Accumulated depreciation 25,000
To eliminate gain on sale of equipment
(6) Accumulated depreciation 2,000

Depreciation 2,000
To adjust excess depreciation
(7) Accounts payable 7,000

Accounts receivable 7,000
To eliminate intercompany payables and receivables.
(8) NCI in CI of subsidiary 6,000

NCI 6,000
(P40,000 – 10,000) x 20%
Problem 18-6, Continued:

b. Vincent Company and Subsidiary
Consolidation Working Paper
December 31, 2013
124
Vincent Jupiter Adjustments & Eliminations Consoli-
Company Company Debit Credit dated
Statement of CI
Sales 240,000 120,000 360,000
Gain on sale of equipment 20,000 (5) 20,000 -
Dividend income 4,000 (1) 4,000 -
Total revenues 264,000 120,000 360,000
Cost of goods sold 140,000 60,000 200,000
Depreciation 25,000 15,000 (6) 2,000 38,000
Other expenses 15,000 5,000 20,000
Total cost and expenses 180,000 80,000 258,000
Net/consolidated CI 84,000 40,000 102,000
NCI in CI of subsidiary (8) 6,000 (6,000)
CI carried forward 84,000 40,000 96,000
Retained Earnings Statement

Retained earnings, Jan.1 294,000 105,000 (2) 50,000 341,000
(4) 8,000
CI from above 84,000 40,000 96,000
Total 378,000 145,000 437,000
Dividends declared 30,000 5,000 (1) 5,000 30,000
Retained earnings, Dec. 31
Carried forward 348,000 140,000 407,000
Statement of FP
Cash and receivables 113,000 35,000 (7) 7,000 141,000
Inventory 260,000 90,000 350,000
Land 80,000 80,000 (4) 10,000 150,000
Buildings and equipment 500,000 150,000 (5) 5,000 655,000
Investment in Jupiter Company 160,000 (2)120,000 -
(3) 40,000
Goodwill (3) 40,000 40,000
Total 1,113,000 355,000 1,336,000
Accumulated depreciation 205,000 45,000 (6) 2,000 (5) 25,000 273,000

Accounts payable 60,000 20,000 (7) 7,000 73,000
Bonds payable 200,000 50,000 250,000
Common stock 300,000 100,000 (2)100,000 300,000
Retained earnings from above 348,000 140,000 407,000
NCI (1) 1,000 (2) 30,000 33,000
(4) 2,000 (8) 6,000
Total 1,113,000 355,000 245,000 245,000 1,336,000
.Problem 18-6, Continued:

c. Consolidated Financial Statements
Vincent Company and Subsidiary
125
Consolidated Statement of Financial Positionj
December 31, 2013
Assets
Cash and cash equivalents P 121,000
Accounts receivable 21,000
Inventory 350,000
Land 150,000
Buildings and equipment P655,000
Less: Accumulated depreciation 273,000 382,000
Goodwill 40,000
Liabilities and Stockholders’ equity

Liabilities
Accounts payable P 73,000
Bonds payable 250,000
Total liabilities P 323,000
Stockholders’ Equity
Common stock P300,000
Retained earnings 407,000
NCI 33,000 740,000
Total liabilities and stockholders’ equity P1,063,000

Sales P 360,000
Cost of goods sold 200,000
Expenses: Depreciation P 38,000
Other expenses 20,000 58,000
Consolidated comprehensive income 102,000
Attributable to NCI 6,000

Consolidated Retained Earnings
Retained earnings, Jan. 1 – Vincent P 294,000

Retained earnings, Jan. 1 – Jupiter 47,000
Total 341,000
Consolidated CI attributable to parent 96,000
Dividends declared – Vincent ( 30,000)
Consolidated retained earnings P 407,000
Problem 18-7
126
P Company and Subsidiary
Consolidated Working Paper
Eliminations/ Adjustments Conso-

P Company S Company Debit Credit lidated
Statement of CI
Sales 600,000 315,000 (7) 40,000 875,000
Total revenue 616,000 315,000 875,000
Cost of goods sold 350,000 150,000 (9) 5,000 (7) 40,000
(8) 10,000 455,000
Operating expenses 150,000 60,000 (6) 6,250 (11) 3,000 213,250
Total costs and expenses 500,000 210,000 668,250
CI 116,000 105,000 206,750
NCI in CI of S (2) 20,750 (20,750)

Retained earnings, January 1 280,000 150,000 (1) 6,250 285,000
(4)100,000
(6) 18,750
(8) 8,000
(10) 12,000
CI from above 116,000 105,000 186,000
Dividends declared (60,000) (20,000) (3) 20,000 (60,000)
RE, 12/31 carried forward 336,000 235,000 411,000
Statement of FP
Inventory 130,000 50,000 (5) 12,500 (6) 12,500 175,000
(9) 5,000
Other current assets 241,000 235,000 476,000
Investment in S Company 200,000 (4)160,000
(5) 40,000
Goodwill (5) 12,500 12,500
Other long-term investments 20,000 20,000
Land 140,000 80,000 220,000
Buildings and equipment 375,000 200,000 (5) 25,000 (10) 15,000 585,000
Intangible assets 20,000 20,000
Totals 1,106,000 585,000 1,508,500

(11) 3,000
Current liabilities 150,000 70,000 220,000
Non-current liabilities 200,000 150,000 350,000
Common stock 200,000 50,000 (4) 50,000 200,000
APIC 100,000 50,000 (4) 50,000 100,000
RE, 12/31 from above 336,000 235,000 411,000
NCI (3) 4,000 (1) 6,250 71,000

(8) 2,000 (2) 20,750
(4) 40,000
(5) 10,000
Totals 1,106,000 585,000 395,000 395,000 1,508,000
Problem 18-7, continued:

Determination and Allocation of Excess Schedule
Company Parent NCI
127
Implied Price Value
Fair Value (80%) (20%)
Price paid for investment P250,000 P200,000 P 50,000*
Less book value of interest acquired:
Total equity 200,000 P200,000 P200,000
Interest acquired 80% 20%
Book value of interest acquired P160,000 P 40,000
Excess P 50,000 P 40,000 P 10,000
Allocations
Inventory (12,500)
Equipment (25,000)
Total (37,500)
Goodwill P12,500
* (P200,000/80%) x 20% = P50,000
Amortization
Inventory P12,500
Equipment (P25,000/4) 6,250
Explanations of Eliminations and Adjustments:
(1) To recognize NCI share in subsidiary’s adjusted prior year’s undistributed earnings
(P50,000 – P18,750) 20% = P6,250.
(2) To recognized NCI in CIof subsidiary for the current year
(P105,000 + P10,000 – P5,000 – 6,250) x 20% = P20,750
(3) To eliminated intercompany dividends paid the subsidiary.
(4) To eliminate equity of the subsidiary at date of acquisition.
(5) To allocate excess.
(6) To amortize allocated excess.
(7) To eliminate intercompany sales.
(8) To eliminate beginning inventory profit.
(9) To eliminate ending inventory profit.
(10) To eliminate fixed asset gain at beginning of year.
(11) To eliminate realized gain on fixed assets.
Problem 18-8
128
Supporting computations
(1) Determination and allocation of excess schedule;
Total Price paid (60%) NCI (40%)

Company fair value P620,00 P372,000 P248,000
Less book value of interest acquiree:
Small’s equity 350,000 350,000 350,000
Interest acquired 60% 40%
Book value of interest acquired 210,000 140,000
Excess 270,000 162,000 108,000
Allocated to patents ( 120,000)
Goodwill P150,000
Amortization of patents (P120,000 / 12) P 10,000
(2) Unrealized gain on intercompany sale of building – Upstream, Jan. 1, 2013:

Unrealized gain at date of sale (P80,000 – P30,000) P 50,000
Realized gain (P50,000 / 5) x 2 years (20,000)
Unrealized gain as of Jan. 1, 2013 P 30,000
(3) Realized profit from intercompany sale of inventory – Downstream, 1/1/13:

Remaining inventory as of Dec. 31, 2012 P 50,000
Gross profit rate on sales – 2012 (P30,000 / P150,000) x 20%
Realized profit as of Jan. 1, 2013 P 10,000
(4) Unrealized profit from intercompany sale of inventory – Downstream, 12/31/13

Remaining inventory as of Dec. 31, 2013 P 40,000
Gross profit rate on sales – 2013 (P48,000 / P160,000) x 30%
Unrealized profit as of Dec. 31, 2013 P 12,000
Consolidated balances – 2013
a. Cost of goods Sold

Cost of goods sold – Apex P 460,000
Cost of goods sold – Small 205,000
Intercompany sale of inventory – 2013 (160,000)
Realized profit on beginning inventory ( 10,000)
Unrealized profit on ending inventory 12,000)
Consolidated P 507,000
b. Operating Expenses
Operating expenses – Apex P 170,000
Operating expenses – Small 70,000
Amortization (No. 1 above) 10,000
Excess depreciation (P50,000 / 5 years) (10,000)
Consolidated P 240,000
c. Consolidated Comprehensive Income Attributable to Parent
129
Sales (after elimination of intercompany sales) P 840,000
Cost of goods sold (a) (507,000)
Operating expenses (b) (240,000)
NCI in CI of subsidiary:
CI – Small P25,000
Realized gain on sale of building – Upstream 10,000
Adjusted CI P35,000
NCI x 40% ( 14,000)
d. Consolidated Retained Earnings, Jan. 1, 2013

Retained earnings, Jan. 1, 2012 – Apes P 690,000
Amortization of patents – 2007 to 2012(P10,000 x 6) (60,000)
Unrealized profit on inventory, 2012– Downstream (10,000)
Unrealized gain on sale of building, 1/1/13 - Upstream (P30,000 x 60%) (18,000)
Consolidated retained earnings, Jan. 1, 2013 P 602,000
e. Consolidated Inventory
Inventory – Apex P 233,000
Inventory – Small 229,000
Unrealized profit in inventory – Dec. 31, 2013 ( 12,000)
Consolidated inventory P 450,000
f. Consolidated Building
Buildings – Apex P 308,000
Buildings – Small 202,000
Unrealized gain, Jan. 1, 2013 (50,000)
Realized gain, 2011– 2013 (P10,000 x 3 ) 30,000
Consolidated buildings P 490,000
g. Consolidated Patents
Patents – Small P 20,000
Allocation 120,000
Amortization, 2007 – 2013 (P10,000 x 7) ( 70,000)
Consolidated patents (net) P 70,000
h. Consolidated Common Stock = P300,000 (Apex common stock)
Problem 18-9
130
P Company and Subsidiary
Consolidated Worksheet
Eliminations Adjustments Conso-

P Company S Company Debit Credit lidated
Statement of CI
Sales 1,900,000 1,500,000 (7)180,000 3,220,000
Total revenue 1,940,000 1,500,000 3,220,000
Cost of goods sold 1,180,000 870,000 (8) 18,000 (7)180,000 1,888,000
Operating expenses 550,000 440,000 (4) 9,000 (6) 4,000 995,000
Total costs and expenses 1,730,000 1,310,000 2,883,000

Retained earnings, Jan. 1 250,000 206,000 (2)156,000 258,000
(4) 18,000
(5) 24,000
CI from above 210,000 190,000 337,000
Dividends paid (40,000) (1) 40,000 -
RE, 12/31, carried forward 460,000 356,000 595,000
Statement of FP
Cash 285,000 150,000 435,000
Accounts receivables (net) 430,000 350,000 (9) 75,000 705,000
Inventories 530,000 410,000 (8) 18,000 922,000
Land, buildings, and equipment 660,000 680,000 (3) 54,000 (5) 30,000 1,364,000
Investment in S Company 750,000 (2)636,000
(3)114,000
Goodwill (3) 60,000 60,000
Totals 2,655,000 1,590,000 3,486,000

(6) 4,000
Accounts payable 670,000 544,000 (9) 75,000 1,139,000
Common stock, P10 par 1,200,000 400,000 (2)400,000 1,200,000
APIC 140,000 80,000 (2) 80,000 140,000
Retained earnings from above 460,000 356,000 595,000
Totals 2,655,000 1,590,000 1.124,000 1,124,000 3,486,000
Determination and Allocation of Excess Schedule
Price paid by the parent P750,000

Less book value of interest acquired (100%)
Common stock – S Company P400,000
Additional paid in capital – S Company 80,000
Retained earnings – S Compay 156,000 636,000
Excess P114,000
Allocated to machinery (54,000)
Goodwill P 60,000
131
Problem 18 – 10
Pluto Corporation and Subsidiary Star Corporation

Comparative Consolidated Income Statement
Years Ended December 31, 2012 and 2013
. December 31 .
. 2013 2012 .
Sales P800,000 P660,000
Cost of goods sold 442,000 368,000 .
Gross profit 358,000 292,000
Operation expenses 178,000 138,000 .
Consolidated comprehensive income 180,000 154,000
NCI in CI of subsidiary 10,000 10,000 .
Attributable to equity holders of Pluto P170,000 P144,000 .
Supporting computations:
. .
. 2013 2012 .
Consolidated sales:
Combined sales P850,000 P700,000
Less: intercompany sales (50,000) (40,000) .
Consolidated sales P800,000 P660,000 .
Consolidated cost of goods sold:

Combined costs of good sold P490,000 P400,000
Intercompany sales (50,000) (40,000)
Unrealized profit in ending inventory 10,000 8,000
Unrealized profit in beginning inventory (8,000) .
Consolidated cost of goods sold P442,000 P368,000 .
Consolidated operating expenses

Combined operating expenses P180,000 P140,000
Realized gain on sale of equipment (P10,000/.2) (2,000) (2,000) .
Consolidated operating expenses P178,000 P138,000 .
NCI in CI of subsidiary
Star Company’s reported CI P65,000 P50,000
Gain on upstream sale of land (5,000)
Unrealized gain in upstream, inventory sales (10,000) .
Realized CI P50,000 P50,000
NCI 20% 20% .
NCI in CI of subsidiary P10,000 P10,000 .
132
133

14-6: A (At Fair Value at Date of Acquisition) 14-7: D: Total Net Income P1,800,000

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14-6: A (At Fair Value at Date of Acquisition) 14-7: D: Total Net Income P1,800,000

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Costs of SEC registration P12,000

Cost of issuing stock certificates 3,000

14-6: a (at fair value at date of acquisition)

Abel net income, January to December (P80,000 + P1,320,000) P1,400,000

Price paid P 800,000

Price paid P2,550,000

14-6: a (at fair value at date of acquisition)

Abel net income, January to December (P80,000 + P1,320,000) P1,400,000

Price paid P 800,000

Price paid P2,550,000

14-6: a (at fair value at date of acquisition)

Abel net income, January to December (P80,000 + P1,320,000) P1,400,000

Price paid P 800,000

Price paid P2,550,000

Depreciation expense (H$ 12,000 x P5.80) P 69,600

MULTIPLE CHOICES - COMPUTATIONAL

Liabilities Total P450,000

MULTIPLE CHOICES - COMPUTATIONAL

Liabilities Total P450,000

Depreciation expense (H$ 12,000 x P5.80) P 69,600

MULTIPLE CHOICES - COMPUTATIONAL

Investment in Son, Jan. 1 P310,000 P396,200CHAPTER 18

MULTIPLE CHOICES – COMPUTATIONAL

Equipment – at original cost P500,000

NCI in CI of subsidiary (P110,800 x 25%) P 27,700

Equipment – at original cost P1,000,000

Investment in Son, Jan. 1 P310,000 P396,200CHAPTER 18

MULTIPLE CHOICES – COMPUTATIONAL

Equipment – at original cost P500,000

NCI in CI of subsidiary (P110,800 x 25%) P 27,700

Equipment – at original cost P1,000,000

Investment in Son, Jan. 1 P310,000 P396,200CHAPTER 18

MULTIPLE CHOICES – COMPUTATIONAL

Equipment – at original cost P500,000

NCI in CI of subsidiary (P110,800 x 25%) P 27,700

Equipment – at original cost P1,000,000

MULTIPLE CHOICES - COMPUTATIONAL

16-1: c, [(P260,000/80%) x 20%]

16-3: a, because there is no NCI in a wholly owned subsidiary.

Investment cost (price paid) P500,000

Cost Method Equity Method

NCI, January 2, 2013 [(P270,000/75%) x 25%] P 90,000

Peter’s CI from own operations P1,000,000

2011 2012 2013

16-1: c, [(P260,000/80%) x 20%]

16-3: a, because there is no NCI in a wholly owned subsidiary.

Investment cost (price paid) P500,000

Cost Method Equity Method

NCI, January 2, 2013 [(P270,000/75%) x 25%] P 90,000

Peter’s CI from own operations P1,000,000

2011 2012 2013

16-1: c, [(P260,000/80%) x 20%]

Investment cost (price paid) P500,000

Cost Method Equity Method

NCI, January 2, 2013 [(P270,000/75%) x 25%] P 90,000

Peter’s CI from own operations P1,000,000

Time of sale P360,000

Adjusted CI – Susie (P12,000 / 40%) P 30,000

NCI, January 1, 2013 (P1,000,000 x 20%) P 200,000

Consolidated CI attributable to parent:

Net assets – Steve, Dec.31, 2013 (P200,000 / 20%) P1,000,000

Investment in Steve Company stock – Equity method

CI from own operations – Pipe P400,000