No. 125 Brgy.

Saan Sebastian
Lipa City, Batang
gas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gm
mail.com

PRO OBLEM 11. Galaxy C Corporatioon acquiredd 80% of tthe outstannding sharees of Uniteed Companny on Junee
1, 20021 for P3,517,500. United Coompany’s sstockholdeer’s equity componennts at the ennd of this yyear are ass
folloows: Ordinnary sharees, P100 par, P1,5000,000, Share prem mium P6755,000 andd Retainedd Earningss
P1,3335,000.Noon-controllling interest is measuured at faiir value annd the fair value is P7705,000. The assetss
of UUnited werre fairly vaalued, except for invventories, which are overstatedd by P66,0000, and eequipment,,
whicch was undderstated bby P90,0000. Remaining useful life of equuipment iss 4 years. S Stockholdeer’s equityy
of GGalaxy on January 1,, 2021 is ccomposed of Ordinarry shares P P4,500,0000, Share ppremium P1,050,000,,
Retaained Earnnings P3,1550,000. Gooodwill, iff any, shouuld be wriitten downn by P85,3350 at yeaar-end. Nett
Incoome for thhe first yeear of pareent is P4550,000 andd the net income off subsidiarry from thhe date off
acquuisition is P255,000. Dividendds declaredd at the ennd of the yyear amounnted to P120,000 annd P90,0000
resppectively foor Galaxy aand Unitedd. During thhe year, thhere was noo issuance of new orddinary sharres.

1. How m
much is thee non-conttrolling inteerest in nett assets on Decemberr 31, 2021??
2. What is the amount of consolidated sshareholdeer’s equity on Decem mber 31, 20221?

PRO OBLEM 22. On Januuary 1, 200x4, A Coorp acquireed 90% off B Corp for P180,,000 cash . B Corp..
repoorted net inncome of PP30,000 annd dividendds of P10,0000 for 200x4, 20x5 aand 20x6. On Januarry 1, 20x4,,
B Corp. reportted ordinarry shares ooutstandingg of P100,,000 and reetained earrnings of P P60,000, annd the fairr
valuue of the noon-controllling interesst was P200,000. It heeld land wiith a book value of P
P30,000 andd a markett
valuue of P35,0000 and equuipment w with book vvalue of P550,000 andd a market vvalue of P60,000 at tthe date off
com
mbination. T The remainnder of thee differential of acquuisition waas attributaable to an iincrease inn the valuee
of ppatents, whhich has a rremaining useful lifee of fiv-e yyears. All ddepreciablle assets heeld by B CCorp at thee
datee of acquissition has a remainiing econom mic life oof five yeaars. A Corrp uses thhe equity m method off
accoounting forr its Investm
ment in B.

1. The inncrease in tthe fair vallue of patennts held byy B is:

2. What bbalance woould A repport as its IInvestmentt in B at Jannuary 1, 200x5?
3. What bbalance woould A repport as its innvestmentt in B at Jannuary 1, 200x6?

PRO OBLEM 33. CC Corpporation accquired 70% % of the shhares of stoocks of DD

D Company at book vvalue. Thee
folloowing weree in the sepparate books of CC aand DD forr 2021:

CC Corporation DD
D Companny

Salles P700,000 P400,000

Coost of sales 400,000 200,000
Opperating exppenses 120,000 100,000
Neet income 180,000 100,000

The following were interrcompany sales of innventory froom CC Coorporation tto DD Com
mpany:

Endingg Inventoryy of Buyingg GP raate of cost of selling

Seelling pricee
affiliate affiliatte
Froom 2020 saales 210,000 390,000 40%
Froom 2021 saales 270,000 275,000 35%

The following were interrcompany sales of innventory froom DD Coompany to CC Corpooration:

Ennding Inveentory of
Seelling pricee Cost
Buying afffiliate
Froom 2020 saales 95,0000 265,000 185,5000
Froom 2021 saales 84,0000 208,000 93,600

1. What is thhe consoliddated net inncome attriibutable to parent forr the year eended Deceember 31, 2021?
2. What is thhe consoliddated sales for the yeaar ended DDecember 331, 2021?
3. What is thhe consoliddated cost oof goods soold for the year endedd Decembeer 31, 20211?

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RFERRER/RLACO/ATANG/PDEJESUS
 No. 125 Brgy. Saan Sebastian
Lipa City, Batang
gas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gm
mail.com

PRO OBLEM 44. A Corp acquired a 70% interest in B Corp. on January 11, 20x1, w when B Corp.’s bookk
valuues were equal to theeir fair vaalues. During 20x1, A Corp. soold merchhandise thaat cost P755,000 to B
Corpp for P1100,000. On D December 31, 20x1, ¾ of the m merchandise acquiredd from A C Corp. remaained in B
Corpp’s inventoory. Separaate incomee (investmeent incomee not includded) of A aand B are aas follows:

A B
Salles revenuee 150,000 200,000
Cost of goodss sold 90,000 70,000
OP
PEX 12,000 15,000
Sepparate Incoome 48,000 115,000

1. The coonsolidatedd income statement of A Corpp and subssidiary for the year eended Deccember 31,,
20x1 w will show cconsolidateed cost of sales of:
2. A’s Innvestment income foor 20x1 asssuming divvidends paaid by B C
Corp amounnted to P440,000 willl
be:
- Usinng cost metthod
- Usinng Equity m
method

PRO OBLEM 55: On Januuary 1, 2020, Entity A acquiredd 80% of outstandingg ordinary shares of E Entity B att
a gaain on barggain purchase of P1880,000. Thhe followinng intercom
mpany trannsactions ooccurred foor betweenn
the ttwo entitiees:

 On Januarry 1, 2020,, Entity B sold a lannd to Entityy A with a cost of P P1,000,000 at a sellinng price off
P1,100,000. The landd was evenntually soldd by Entityy A to thirdd persons dduring 20221.

 On Januarry 1, 20200, Entity A sold a w white macchinery to Entity B with a coost of P2000,000 andd
accumulatted depreciiation of P440,000 at a selling prrice of P1880,000. Thhe machineery is alreaady 4 yearss
old at the ddate of salee. The resiidual valuee of white m
machinery is immateerial.

 On July 11, 2021, E Entity B soold a blacck machinnery to Enntity A at with a coost of P2770,000 andd
accumulatted depreciiation of P180,000 att a selling pprice of P660,000. Thhe machineery is alreaady 6 yearss
old at the ddate of salee. The resiidual valuee of black m
machinery is immaterial.

For the year ended December 311, 2021, E Entity A rreported neet income of P800,000 whilee Entity B
repoorted net iincome off P500,0000 and distrributed divvidends off P150,0000. Entity A accountted for itss
inveentory in E
Entity B usiing cost meethod in itss separate financial sstatements..

1. What is thhe consoliddated depreeciation exppense of m

machinery ffor 2021?

2. What is thhe consoliddated carryiing amounnt of machiinery on December 31, 2021?

3. What is thhe non-conttrolling intterest in neet income ffor 2021?

4. What is thhe consoliddated net inncome attriibutable to parent shaareholders for 2021?

PRO OBLEM 66. P Corp. acquired a 90% inteerest in S C Corp. in 200x1, at thatt time S C
Corp book vvalues andd
fair values werre equal too one anothher. On Jannuary 1, 200x5, S Corpp sold a truuck with a P45,000 bbook valuee
to P Corp. for P90,000. P is deprecciating the truck overr 10 years using the sstraight linne method and equityy
methhod. Separrate incomee for P andd S Corp foor 20x1 weere as folloows:

P S
Salees 11,800,000 1,050,0000
Gainn on sale oof truck 45,0000
COG GS ((750,000) (285,0000)
Deppreciation eexpense ((450,000) (135,0000)
Otheer expensees ((180,000) (450,0000)
Sepaarate Incommes 420,000 225,0000

P’s IInvestment income fr

from S Corrp for 20x11 will be:

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RFERRER/RLACO/ATANG/PDEJESUS
 No. 125 Brgy. Saan Sebastian
Lipa City, Batang
gas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gm
mail.com

Theeory
1. In the preeparation oof a consoolidated sttatement w working paaper, dividdend incom me recognnized by a
parent com
mpany for a dividendds distributeed by its suubsidiary iis:
a. Includded with paarent comppany incom me from othher sourcess to constittute consollidated nett income.
b. Assignned as a coomponent oof non-conntrolling innterest
c. Allocaated proporrtionately tto consoliddated net inncome andd the non-ccontrolling interest
d. Eliminnated

2. Which of tthe followiing statemments is corrrect?

a. Only the parennt’s portionn of the ddifference between the book value annd fair vallue of thee
subsiddiary’s asseets is assigned to thosse assets.
b. Goodw will represents the diifference bbetween thhe book vaalue of the subsidiaryy’s net asseets and thee
amounnt paid by tthe parent to buy ow wnership
c. The noon-controlling interest sharehollders’ claim m of the suubsidiary’ss net asset is based onn the bookk
value of the subssidiary’s net assets.
d. Total assets repported by the parennt generallyy, will bee less thann total asssets reportted on thee
consollidated stattement of ffinancial pposition.

3. An intercoompany invventory traansfer abovve cost occcurred in 220x2. At Deecember 31, 20x2, a portion off
the inventtory transfferred rem mained unssold. Whicch of the followingg accountss would nnot requiree
adjustmennt or eliminnation in thhe consoliddation at thhe end of 200x2?
a. Intercoompany saales
b. Intercoompany COGS
c. Inventtory
d. None of the abovve

4. Non-contrrolling inteerest in connsolidated nnet incomee is never aaffected byy

a. Downnstream sales
b. Upstreeam sales
c. NCI iss always afffected by both typess of sales
d. None of the abovve

5. Subsidiaryy companyy sells equiipment to iits Parent ccompany aat a gain. IIn years suubsequent tto the yearr
of intercom
mpany salee, a workinng paper enntry is madde under thhe cost metthod debitiing:
a. Equipm ment
b. Retainned Earnings – Parennt
c. Non-C Controllingg Interest
d. All off the above

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RFERRER/RLACO/ATANG/PDEJESUS