AFAR 05 Separate and Consolidated FS

Page 1 of 9 | AFAR 05
Separate and Consolidated FS

MARK ALYSON B. NGINA, CPA, CMA
SEPARATE AND CONSOLIDATED FS

MARK ALYSON B. NGINA, CPA CMA
Separate Financial Statements

Separate financial statements are those presented by a parent (i.e. an investor with control of a subsidiary) or an investor
with joint control of, or significant influence over, an investee, in which the investments are accounted for at cost, in
accordance with PFRS 9 Financial Instruments, or using the equity method as described in PAS 28 Investments in
Associates and Joint Ventures.
When an entity prepares separate financial statements, it shall account for investments in subsidiaries, joint ventures and
associates either:
a) at cost;
b) in accordance with PFRS 9; or
c) using the equity method as described in PAS 28.
Consolidated Financial Statements

The financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent
and its subsidiaries are presented as those of a single economic entity
Control
An investor controls an investee if and only if the investor has all of the following elements:
a) power over the investee, i.e. the investor has existing rights that give it the ability to direct the relevant activities
(the activities that significantly affect the investee's returns)
b) exposure, or rights, to variable returns from its involvement with the investee
c) the ability to use its power over the investee to affect the amount of the investor's returns.
Reverse acquisitions
A reverse acquisition occurs when the entity that issues securities (the legal acquirer) is identified as the acquiree for
accounting purposes. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for
accounting purposes for the transaction to be considered a reverse acquisition.
Changes in the ownership interests

1. No loss of control
2. Loss of control
REVIEW QUESTIONS: THEORETICAL

1. Separate financial statements
a. Refers to a particular form of general-purpose financial reports that provide information about the reporting entity’s
assets, liabilities, equity, income and expenses.
b. Refers to financial statements of a reporting entity that comprises two or more entities that are not all linked by a
parent-subsidiary relationship.
c. Are those presented by a parent (i.e. an investor with control of a subsidiary) or an investor with joint control of, or
significant influence over, an investee, in which the investments are accounted for at cost, in accordance with PFRS
9, or using the equity method as described in PAS 28.
d. Are those of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its
subsidiaries are presented as those of a single economic entity
2. In the separate financial statements of a parent entity, investments in subsidiaries that are not classified as held for sale
should be accounted for
a. At cost.
b. In accordance with PFRS 9.
c. Using the equity method.
d. Any of the above.
3. Which of the following is incorrect in accordance with PAS 27 Separate Financial Statements?
a. PAS 27 requires the preparation of separate financial statements for some entities.
b. Where an investor with subsidiaries, associates or joint ventures does prepare separate financial statements
purporting to comply with PFRS, they must be prepared in accordance with PAS 27.
REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

www.reocpareview.ph REAL EXCELLENCE ONLINE CPA REVIEW
(074) 665 6774 0916 840 0661 support@reocpareview.ph MAY 2021 CPA REVIEW SEASON

SEPARATE AND CONSILIDATED FS
c. The financial statements of an entity that does not have a subsidiary, associate or joint venture are not 'separate
financial statements'.
d. Separate financial statements are sometimes called ‘individual financial statements’, ‘stand-alone’, ‘solus’, or
‘single-entity financial statements.
4. Which of the following statement is correct statement when using the cost method under PAS 27 Separate Financial
Statements?
a. An entity recognizes a dividend from a subsidiary, joint venture or associate as a reduction in the carrying amount
of the investment.
b. An entity recognizes a dividend from a subsidiary, joint venture or associate in profit or loss in its separate financial
statements when its right to receive the dividend is established.
c. An entity recognizes a dividend from a subsidiary, joint venture or associate directly in equity.
d. An investor entity recognizes its share of the investee's profit or loss and its share of the investee's other
comprehensive income
5. PFRS 10 shall be applied in preparation and presentation of financial statements of:
a. Group entities under control of a parent
b. Group entities under common management
c. Single entity with multiple controls
d. Group entities under more than one parent
6. A parent which has one or more subsidiaries shall:
a. Compulsorily present consolidated financial statements
b. Compulsorily present consolidated financial statements unless exempted
c. Compulsorily present standalone financial statements
d. Voluntarily present Consolidated financial statements at the option of the management
7. Which of the following is a criterion for a parent to be exempted from the presentation of consolidated financial
statements?
I. It is a wholly owned subsidiary or a partially owned subsidiary of another entity, and its other owners, including
those otherwise not entitled to vote, have been informed about and do not object to the non-consolidation
II. The ultimate or intermediate parent of the parent has PFRS consolidated financial statements for public use
complying with PFRS.
III. The parent did not file nor is it in the process of filing its financial statements with a security commission or other
regulatory organization to issue any class of instruments in a public market.
IV. Its debt or equity instruments are not traded in a public market.
a. Any of the above b. I and IV only c. I, II and III d. I, II, III and IV
8. Which of the following is not a characteristic of control under PFRS 10?
a. An investor has power over the investee
b. An investor has the power to govern the investee
c. An investor has exposure or rights to variable returns from its involvement with the investee
d. An investor has the ability to use its power to affect the investor's returns from its involvement with the investee.
9. Control is presumed to exist unless the contrary is proved if:
a. The parent owns at least 25% of the share capital of the subsidiary
b. The parent owns more than half the voting power of the subsidiary
c. The parent owns at least 50% of the debt capital of the subsidiary
d. The parent owns at least 76% of the capital of its subsidiary
10. Under PFRS 10, it refers to the term used to describe ownership of the largest block of voting rights in a situation where
the remaining rights are widely dispersed even if it is less than the majority interest thereby requiring the holder of such
interest to prepare consolidated financial statements?
a. De jure control b. De facto control c. Legal control d. Nominal control
11. Apple has acquired an investment in a subsidiary, Banana, with the view to dispose of this investment within six months.
The investment in the subsidiary has been classified as held for sale and is to be accounted for in accordance with
PFRS 5. The subsidiary has never been consolidated. How should the investment in the subsidiary be treated in the
financial statements?
a. Purchase accounting should be used.
b. Equity accounting should be used.
c. The subsidiary should not be consolidated but PFRS 5 should be used.
d. The subsidiary should remain off balance sheet.
12. Which of the following is incorrect regarding consolidation procedure?
a. Combine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its
associates.


b. Offset (eliminate) the carrying amount of the parent's investment in each subsidiary and the parent's portion of
equity of each subsidiary.
c. Eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between entities of the group
d. Profits or losses resulting from intragroup transactions that are recognized in assets, such as inventory and fixed
assets, are eliminated in full.
13. Which of the following is incorrect regarding consolidation of financial statements?
a. Consolidation of an investee shall begin from the date the investor obtains control of the investee and cease when
the investor loses control of the investee.
b. A parent shall prepare consolidated financial statements using uniform accounting policies for like transactions and
other events in similar circumstances.
c. A parent shall present non-controlling interests in the consolidated statement of financial position within equity,
separately from the equity of the owners of the parent.
d. The parent and subsidiaries are required to have the same reporting dates, or consolidation based on additional
financial information prepared by subsidiary, unless impracticable. Where impracticable, the most recent financial
statements of the subsidiary are used, adjusted for the effects of significant transactions or events between the
reporting dates of the subsidiary and consolidated financial statements. The difference between the date of the
subsidiary's financial statements and that of the consolidated financial statements shall be no more than three years.
14. Which of the following statements is not true about non-controlling interests?
a. Non-controlling share of losses in excess of the interest is not recognized against the non-controlling interest unless
the non-controlling interest has a binding obligation and is able to make an additional investment to cover the losses.
b. In cases when the non-controlling interests hold outstanding cumulative preference shares, the parent’s share of
profits or losses is computed after adjusting for dividends on such shares, whether or not such dividends have been
declared.
c. Non-controlling interests should be presented separately in both the income statement and the balance sheet, within
equity, separately from the parent’s equity.
d. Non-controlling interest comprises the amount calculated at the date of the original combination and the non-
controlling’s share of changes in equity that occur after the date of the combination.
15. When control over a subsidiary is lost, then the goodwill on acquisition is derecognized at:
a. Carrying amount c. Realizable amount
b. Fair value d. Replacement cost
16. Changes in parent’s ownership interest in a subsidiary that do not result in a loss of control are accounted as:
a. Equity transactions c. Control transactions
b. Loan transactions d. Non-control transactions
17. When the parent company disposes off a part of the investment in its subsidiary, resulting in loss of control over the
other enterprise, then profit or loss arising from such sale should be:
a. Ignored c. Deducted from goodwill
b. Recognized in statement of equity d. Recognized in profit or loss
18. In a reverse acquisition, the public entity is usually the
a. Economic parent c. Economic subsidiary
b. Accounting acquirer d. Purchaser.
19. The capital structure of the combined entity under a reverse acquisition reflects the equity of the
a. Legal parent c. Legal subsidiary
b. Accounting acquirer d. Any of these
20. The non-controlling interest in a group combined in a reverse stock acquisition is not shareholders of the
a. Legal subsidiary c. Accounting acquirer
b. Legal parent d. Economic parent
21. An investment entity is an entity that:
a. Obtains funds from one or more investors for the purpose of providing those investor(s) with investment
management services;
b. Commits to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation,
investment income, or both;
c. Measures and evaluates the performance of substantially all of its investments on a fair value basis;
d. All of the choices
REVIEW QUESTIONS: COMPUTATIONAL
1. The statement of financial position of Ambo Company as of December 31, 2020 is as follows
Liabilities and
Assets Stockholders’ Equity


Cash ₱ 175,000 Current liabilities ₱ 250,000

Accounts receivable 250,000 Mortgage payable 450,000
Inventories 725,000 Ordinary shares 200,000
PPE 950,000 Share premium 400,000
-- Accumulated profits 800,000
₱2,100,000 ₱2,100,000
On December 31, 2020, the Butchoy, Inc. bought all the outstanding shares of Ambo Company for ₱1,800,000 cash.
On the date of purchase, the fair (market) value of Ambo inventories was ₱675,000, while the fair value of Ambo’s
property, plant and equipment was ₱1,100,000. The fair values of all other assets and liabilities of Ambo Company were
equal to their book values.
Compute the amount of goodwill in the book of Butchoy and in the consolidated statement of financial position,
respectively.
a. ₱ 300,000; ₱ 300,000 c. ₱ 0; ₱ 0
b. ₱ 300,000; ₱ 0 d. ₱ 0; ₱ 300,000
2. On January 1, 2020, Carina Corporation acquired 90% of the outstanding ordinary shares of Dindo Corporation.
Dindo
Carina Book Value Fair Value
Assets
Cash ₱ 50,000 ₱ 25,000 ₱ 25,000
Receivables 95,000 45,000 45,000
Inventories 90,000 40,000 45,000
Land 200,000 90,000 100,000
Building – net 190,000 95,000 90,000
Investment in Dindo 190,000
TOTAL ₱815,000 ₱295,000 ₱305,000
Liabilities and Stockholders' Equity
Accounts payable ₱100,000 ₱ 90,000 ₱ 90,000
Other liabilities 30,000 60,000 50,000
Ordinary shares, ₱10 par 600,000 130,000
Accumulated profits 85,000 15,000
TOTAL ₱815,000 ₱295,000
If NCI is measured at the present ownership instruments' proportionate share in the recognized amounts of the
acquiree's identifiable net assets, how much is the total assets on January 1, 2020?; How much is the total liabilities
and shareholders’ equity on January 1, 2020?
a. ₱955,000; ₱955,000 c. ₱971,500; ₱971,500
b. ₱969,500; ₱969,500 d. ₱953,500; ₱953,500
Use the following data to answer the next three questions:
Enteng Corporation acquired 90% of the outstanding ordinary shares of Ferdie Company on January 2, 2020 for
₱2,000,000. Shareholders’ equity on January 2, 2020 was as follows:
Ferdie Enteng
Ordinary shares, ₱10 par ₱1,450,000 ₱1,000,000
Share premium – ordinary shares 250,000 750,000
8% cumulative preference shares - ₱100 par 600,000 1,250,000
Accumulated profits 500,000 3,000,000
Total ₱2,800,000 ₱6,000,000
The fair value of NCI on January 2, 2020 is ₱250,000. Book value of the following assets exceeded their current fair
value as follows:
Inventories (economic life of 4 months) ₱10,000
Plant assets (economic life of 10 years) 80,000
Any excess is attributed to goodwill and an impairment amounting to ₱12,600 during 2020 is to be recognized. Both
Enteng Company and Ferdie Company use the straight-line method for depreciation and include depreciation expense
in operating expenses. No changes in the shareholders’ equity of both company except for income and dividends.
Enteng uses cost method in accounting for its investment in its separate financial statement.
During 2020, Enteng and Ferdie reported the following results of their own operation:
Enteng Ferdie
Sales ₱1,800,000 ₱1,000,000
Less: Cost of sales 1,080,000 500,000
Less: Operating expense 300,000 260,000


Add: Dividend income 47,000 10,000

Net income ₱ 467,000 ₱ 250,000
Dividends paid ₱ 100,000 ₱ 50,000

The dividend income of Enteng Company includes ₱2,000 dividend from investment in Z classified under PFRS 9 as
financial asset at FVTOCI.
3. How much is the consolidated net income attributable to parent for the year ended 2020?
a. ₱611,910 b. ₱654,400 c. ₱652,400 d. None of the choices
4. How much is the NCI in the consolidated shareholders’ equity on December 31, 2020?
5. How much is the goodwill (gain) to be presented in the consolidated statement of financial position on December 31,
2020?
a. ₱140,000 b. ₱128,000 c. ₱(460,000) d. None of the choices
6. On January 2, 2020, P Company acquired 80% interest in S Company for ₱2,750,000 cash. On this date the outstanding
share capital and accumulated profits of P Company and S Company are as follows:
P Company S Company
Ordinary shares ₱1,500,000 ₱ 875,000
Share premium 1,000,000 -
Accumulated profits 3,500,000 2,125,000
There was no issuance of share capital during the year. NCI is measured at its fair value of ₱687,500. Fair values of
the following assets exceed their book values as follows:
Inventories ₱ 140,000
Property and equipment (useful life, 10 years) 85,000
All other assets and liabilities are fairly valued. Goodwill if any is not impaired. On December 31, 2020, the two
companies reported the following operation results:
P Company S Company
Net income ₱1,190,000 ₱ 650,000
Dividends paid 350,000 175,000
What is the consolidated shareholders’ equity to be reported in the consolidated statement of financial position on
December 31, 2020?
a. ₱7,788,700 b. ₱7,101,200 c. ₱7,451,200 d. ₱7,854,000
Abbreviated trial balances of Gener and Helen Corporation at December 31, 2020 follow:
Gener Helen
Current assets ₱ 240,000 ₱ 130,000
Land 300,000 50,000
Plant and equipment, net 1,000,000 450,000
Investment in Helen 410,000
Cost of sales 1,000,000 300,000
Other expenses 250,000 120,000
Dividends 100,000 50,000
₱ 3,300,000 ₱ 1,100,000
Current liabilities ₱ 225,000 ₱ 100,000
Common stocks 1,000,000 300,000
Retained earnings 500,000 200,000
Sales 1,500,000 500,000
Dividend income 45,000 --
₱ 3,300,000 ₱ 1,100,000
Gener acquired a 90 percent interest in Helen for ₱410,000 cash on January 1, 2019 when Helen’s stockholders’ equity
consisted of ₱300,000 capital stocks and ₱100,000 retained earnings. Any difference between investment cost and
book value acquired relates to equipment with a ten-year life from January 1, 2019.
7. Consolidated net income for 2020 is:
a. ₱ 324,444 b. ₱ 317,000 c. ₱ 330,000 d. ₱ 362,000
8. If NCI is measured at the present ownership instruments' proportionate share in the recognized amounts of the
acquiree's identifiable net assets, the NCI in Helen at December 31, 2020 is:


a. ₱ 45,556 b. ₱ 55,000 c. ₱ 45,777 d. ₱ 57,444

9. Dividend to the noncontrolling interest for 2020 must be:
a. ₱ 50,000 b. ₱ 20,000 c. ₱ 10,000 d. ₱ 5,000


Use the following data to answer the next four questions:

Igme Company acquired 90% interest from Julian Company on January 2, 2019. In 2020, the inventories acquired from
the affiliate are:
Beginning inventory ₱125,000
Ending inventory 250,000
Intercompany sales of merchandise during the year amounts to ₱500,000 at a gross profit rate of 20%. On December
31, 2020, Igme Company and Julian Company reported the following results of own operations:
Igme Julian
Company Company
Sales ₱5,250,000 ₱4,000,000

Cost of sales 3,000,000 2,000,000
Net income 1,250,000 750,000
Dividends paid 500,000 250,000
Ending inventory 450,000 315,000
The company uses the perpetual inventory system. P Company accounts for its investment using the cost method in
its separate financial statement.
10. How much should be presented as consolidated cost of sales if the transaction is
Downstream Upstream
a. ₱8,750,000 ₱8,750,000
b. ₱4,475,000 ₱4,475,000
c. ₱4,500,000 ₱4,500,000
d. ₱4,525,000 ₱4,525,000
11. How much should be presented as consolidated net income if the transaction is
Downstream Upstream
a. ₱1,975,000 ₱1,975,000
b. ₱1,775,000 ₱1,775,000
c. ₱1,800,000 ₱1,800,000
d. ₱1,750,000 ₱1,750,000
12. How much should be presented as consolidated net income attributable to noncontrolling interest if the transaction is
Upstream Downstream
a. ₱75,000 ₱72,500
b. ₱72,500 ₱75,000
c. ₱75,000 ₱75,000
d. ₱72,500 ₱72,500
13. The ending inventory to be presented in the consolidated statement of financial position is
Upstream Downstream
a. ₱715,000 ₱712,500
b. ₱715,000 ₱715,000
c. ₱765,000 ₱765,000
d. ₱715,000 ₱765,000
14. On December 31, 2019, Kristine Company purchased 70% of the outstanding shares of Leon Company for ₱245,000
at gain on bargain purchase of ₱20,000. On that date, Leon Company had ₱100,000 of Capital Stock and ₱250,000 of
Retained Earnings. For 2020, Kristine company had income of ₱200,000 from its own operations and paid dividends of
₱100,000. For 2020, Leon Company reported income of ₱30,000 and paid dividends of ₱20,000. All assets and liabilities
of Leon Company have book values approximately equal their fair values.
The beginning inventory of Kristine Company includes ₱6,000 of merchandise purchased from Leon Co. on December
31, 2019 at 150% of cost. The ending inventory of Leon Co. includes ₱9,000 of merchandise purchased from Kristine
Co. at the same mark up. Kristine and Leon Co. uses FIFO inventory costing.
What is the non-controlling interest in Leon Company for the year ended December 31, 2020?
a. ₱108,600 b. ₱107,700 c. ₱110,700 d. ₱105,000
15. Marce Corporation owns an 80% interest in Nika Corporation and Nika owns a 60% interest in Ofel Corporation. Both
interests were acquired at book value which is equal to fair value. During 2020, Nika sells land costing ₱700,000 to Ofel
at a profit of ₱120,000. Ofel still holds the land at December 31, 2020. Profits (losses) and land account of the three
companies for 2020 are:
Profit (Loss) Land
Marce Corporation ₱1,800,000 1,400,000


Nika Corporation 720,000 1,350,000

Ofel Corporation (300,000) 1,820,000
The amount of consolidated land and consolidated net income attributable to the owners of the parent, respectively is:
a. ₱4,450,000; ₱2,100,000 c. ₱4,570,000; ₱2,136,000
b. ₱4,450,000; ₱2,136,000 d. ₱4,570,000; ₱2,100,000
Use the following data to answer the next four questions:
Income information for 2020 taken from the separate company financial statements of Pepito Corporation and its 75%
owned subsidiary, Quinta Corporation is presented as follows:
Pepito Quinta
Sales ₱ 1,000,000 ₱ 460,000
Gain on sale of building 20,000 --
Cost of goods sold ( 500,000) ( 260,000)
Depreciation expense ( 100,000) ( 60,000)
Other expenses ( 200,000) ( 40,000)
Net income ₱ 220,000 ₱ 100,000
Pepito gain on sale of building relates to a building with a book value of ₱40,000 and a 10-year remaining useful life
that was sold to Quinta for ₱60,000 on January 1, 2020. Quinta declared ₱100,000 dividends during the year.
16. At what amount will the gain on sale of building appear on the consolidated/group income statement of Pepito and
Quinta for the year 2020 should be:
a. Zero b. ₱5,000 c. ₱15,000 d. ₱20,000
17. The Consolidated/group depreciation expense for 2020 should be:
a. ₱158,000 b. ₱160,000 c. ₱162,000 d. ₱180,000
18. The Profit Attributable to Equity Holders of Parent for 2020 should be:
a. ₱295,000 b. ₱277,000 c. ₱275,000 d. ₱220,000
19. The Consolidated/group net income for 2020 should be:
a. ₱277,000 b. ₱302,000 c. ₱320,000 d. ₱348,000
Use the following data to answer the next five questions:
Siony Corp. is an 80 percent owned subsidiary by Rolly Liner, Inc. On January 1, 2014, Siony paid ₱100,000 for a truck
with an expected economic life of 10 years and no anticipated residual value. Siony sold the truck to Rolly Liner Inc.,
on January 1, 2020. During preparation of the consolidation workpaper for 2020, the following workpaper entry was
made to eliminate the effects of the intercompany truck sale:
Truck 48,000
Gain on Sale of Truck 12,000
Depreciation Expense 3,000
Accumulated Depreciation 57,000
20. What amount did Rolly Liner, Inc. pay Siony for the truck?
a. ₱43,000 b. ₱60,000 c. ₱28,000 d. ₱52,000
21. What amount will be reported for trucks and accumulated depreciation in the December 31, 2020, consolidated
statement of financial position, respectively?
a. ₱ 40,000; ₱ 10,000 c. ₱ 52,000; ₱ 13,000
b. ₱ 100,000; ₱ 70,000 d. ₱ 100,000; ₱ 73,000
22. What amount of depreciation was recorded by Rolly Liner during 2020?
a. ₱ 13,000 b. ₱10,000 c. ₱3,000 d. ₱16,000
23. If Siony reports net income of ₱50,000 in 2020, what amount of income will be assigned to the non-controlling interest
in the 2020 consolidated income statement?
a. ₱ 8,200 b. ₱11,800 c. ₱10,000 d. ₱10,600
24. If Siony reports net income of ₱60,000 in 2021, what amount of income will be assigned to the non-controlling interest
in the 2021 consolidated income statement?
a. ₱ 12,000 b. ₱10,200 c. ₱12,600 d. ₱11,400
25. Tonyo Company owns 60% of Ulysses Corporation, which in turn owns 80% of Vicky Company. Ulysses exercises
control over Vicky and Tonyo exercises control over Ulysses. The following information is available:
Tonyo Ulysses Vicky
Company Company Company
Income from continuing operations ₱3,900,000 ₱2,690,000 ₱1,540,000
Cash dividends declared by: 250,000 180,000 110,000


Cash dividends from:

Associates (s) 75,000 50,000 Nil
Other investments at fair value Nil 90,000 40,000
Net unrealized inter-company gains (loss) within current year ₱360,000 (₱220,000) ₱160,000
income Downstream Downstream Upstream
Amortization relating to excess of fair value over book value (190,000) 140,000 Nil
(book value over fair value) of investment
What is the consolidated net income attributable to Tonyo Company stockholders?
a. ₱5,939,400 b. ₱8,893,600 c. ₱5,834,400 d. ₱5,901,600
26. Warren Company’s current receivables from affiliated companies at December 31, 2020 are:
• A ₱75,000 cash advance to Yoyong Corporation (Warren owns 30% of the voting stock of Yoyong and accounts
for the investments in equity method),
• A receivable of ₱260,000 from Vick Corporation for administrative and selling services (Vick is 100% owned by
Warren and is included in Warren’s consolidated financial statement), and
• A receivable of ₱200,000 from Zosimo Corporation for merchandise sales on credit (Zosimo is 90% - owned,
unconsolidated subsidiary of Warren).
In the current assets section of its December 31, 2020 consolidated statement of financial position, Warren should
report accounts receivable from investees in the amount of:
a. ₱275,000 b. ₱225,000 c. ₱265,000 d. ₱305,000
27. On January 2, 2020, P Company purchased 100 percent of the outstanding ordinary shares of S Company for ₱500,000
payable in cash. The condensed statement of financial position of the two companies on January 2, 2020 is shown
below:
Book Values S Company
P Company S Company Fair Values
Cash ₱ 300,000 ₱ 50,000 ₱ 50,000
Accounts receivable 200,000 100,000 100,000
Merchandise inventory 200,000 80,000 100,000
Land and building (net) 700,000 450,000 410,000
Equipment (net) 800,000 200,000 140,000
Investment in S Company 500,000
Total Assets ₱2,700,000 ₱880,000
If P Company uses push-down accounting, what is the amount of land and building (net) to be presented in the separate
FS of S and in the consolidated FS, respectively?
a. ₱450,000; ₱1,110,000 c. ₱410,000; ₱1,110,000
b. ₱450,000; ₱1,150,000 d. ₱410,000; ₱1,150,000
28. If P Company does not use push-down accounting, what is the amount of land and building (net) to be presented in the
separate FS of S and in the consolidated FS, respectively?
a. ₱450,000; ₱1,110,000 c. ₱410,000; ₱1,110,000
b. ₱450,000; ₱1,150,000 d. ₱410,000; ₱1,150,000
29. The statements of financial position of Catriona and Gray immediately before the business combination are:
Catriona Gray
Current assets ₱ 500,000 ₱ 700,000
Non-current assets 1,300,000 3,000,000
₱ 1,800,000 ₱ 3,700,000
Current Liabilities ₱ 300,000 ₱ 600,000
Non-current liabilities 400,000 1,100,000
₱ 700,000 ₱ 1,700,000
Owner’s equity
Accumulated profits 800,000 1,400,000
Ordinary shares
100,000 shares 300,000
60,000 shares 600,000
₱ 1,800,000 ₱ 3,700,000
On September 30, 2020, Catriona issues 2.5 shares in exchange for each ordinary share of Gray. All of Gray’s
shareholders exchange their shares in Gray. Therefore, Catriona issues 150,000 ordinary shares in exchange for all
60,000 ordinary shares of Gray. The fair value of each ordinary share of Gray at September 30, 2020 is ₱40. The quoted
market price of Catriona’s ordinary shares at that date is ₱16. All assets and liabilities book values equal their fair values


except Catriona’s non-current assets with fair value of ₱1,500,000 and Gray non-current assets at ₱3,500,000. What is
the amount of goodwill to be reported in the consolidated financial statements?
On January 1, 2020, Rage acquired 70% of the equity interests of Pin, a public limited company. The purchase
consideration comprised cash of ₱490M. The fair value of the identifiable net assets was ₱480M. Rage wishes to use
the full goodwill method for all acquisitions. The carrying value of the net assets of Pin was ₱535M at December 31,
2020. Of the increase in net assets, ₱37M had been reported in profit or loss, and ₱18M had been reported in other
comprehensive income.
30. If Rage disposed of 60% of the equity of Machine on December 31, 2020 (no other investor obtained control as a result
of the disposal) for ₱510M, how is the gain (loss) on deconsolidation to be recognized in profit or loss?
a. ₱65.6M b. ₱66.5M c. (₱18.5M) d. None of the choices
31. If Rage acquired a further 10% interest from the NCIs in Pin on December 31, 2020 for a cash consideration of ₱85M,
how much is the gain (loss) on the additional acquisition to be included in equity?
a. ₱9.5M b. (₱9.5M) c. (₱62.35M) d. None of the choices
32. If Rage disposes of a 10% interest to the NCIs in Pin on December 31, 2020 for a cash consideration of ₱80M, how
much is the gain (loss) on the additional acquisition to be included in P&L?
a. ₱4.5M b. (₱4.5M) c. (₱10M) d. None of the choices
33. Baguio Co. owns 80% of Bagyo, Inc.’s ordinary shares. On July 1, 2020, Baguio Co. sold half of its investment for
₱400,000. The adjusted balances of the related accounts as of July 1, 2020 immediately before the sale are:
• Investment in subsidiary ₱4,800,000
• Cumulative exchange differences
on translation of a foreign operation 2,000,000 Cr
The remaining 40% ownership (80% x 1/2) still gives Baguio control over Bagyo. How much is the reclassification gain
(loss) on July 1, 2020?
a. ₱800,000 b. (₱800,000) c. ₱2,000,000 d. ₱1,000,000
“Success is not final, failure is not fatal: it is the courage to continue that counts.”
– Winston Churchill
“The secret of a man’s success resides in his insight into the moods of people, and his tact in dealing with them. Once you
master these two, there is no stopping the heights you can soar to.”
“Success means having the peace of mind that is a direct result of knowing you did your best to become the best you are
capable of becoming.”
 -- END OF HANDOUT -- 


AFAR 05 Separate and Consolidated FS

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

AFAR 05 Separate and Consolidated FS

Uploaded by

Copyright:

Available Formats

Page 1 of 9 | AFAR 05

Separate and Consolidated FS

SEPARATE AND CONSOLIDATED FS

Separate Financial Statements

Consolidated Financial Statements

Changes in the ownership interests

REVIEW QUESTIONS: THEORETICAL

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

MARK ALYSON B. NGINA, CPA, CMA

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

MARK ALYSON B. NGINA, CPA, CMA

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

MARK ALYSON B. NGINA, CPA, CMA

Cash ₱ 175,000 Current liabilities ₱ 250,000

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

MARK ALYSON B. NGINA, CPA, CMA

Add: Dividend income 47,000 10,000

Dividends paid ₱ 100,000 ₱ 50,000

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

MARK ALYSON B. NGINA, CPA, CMA

a. ₱ 45,556 b. ₱ 55,000 c. ₱ 45,777 d. ₱ 57,444

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

MARK ALYSON B. NGINA, CPA, CMA

Use the following data to answer the next four questions:

Sales ₱5,250,000 ₱4,000,000

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

MARK ALYSON B. NGINA, CPA, CMA

Nika Corporation 720,000 1,350,000

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

MARK ALYSON B. NGINA, CPA, CMA

Cash dividends from:

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

MARK ALYSON B. NGINA, CPA, CMA

REO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience

You might also like