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  • Advanced Accounting - 2015 (Chapter 17) Multiple Choice Solution (Part N)

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    John Carlos Doringo
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    P Company had inventory of P210,000 and S Company had P154,000 for a total of P364,000 between the two companies. Unrealized profit in ending inventory from intercompany transfers was P16,800. So the consolidated ending inventory was P347,200. The consolidated cost of goods sold is calculated as P140,000 for Parent, P80,000 for Subsidiary, less P100,000 for the intercompany transfer, plus P12,000 in unrealized profit from the transfer in ending inventory, for a total of P132,000. When Parent acquired Subsidiary (SZ), the consideration transferred was P260,000 and the non-cont

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    P Company had inventory of P210,000 and S Company had P154,000 for a total of P364,000 between the two companies. Unrealized profit in ending inventory from intercompany transfers was P16,800. So the consolidated ending inventory was P347,200. The consolidated cost of goods sold is calculated as P140,000 for Parent, P80,000 for Subsidiary, less P100,000 for the intercompany transfer, plus P12,000 in unrealized profit from the transfer in ending inventory, for a total of P132,000. When Parent acquired Subsidiary (SZ), the consideration transferred was P260,000 and the non-cont

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    15 views1 page

    Advanced Accounting - 2015 (Chapter 17) Multiple Choice Solution (Part N)

    Uploaded by

    John Carlos Doringo
    P Company had inventory of P210,000 and S Company had P154,000 for a total of P364,000 between the two companies. Unrealized profit in ending inventory from intercompany transfers was P16,800. So the consolidated ending inventory was P347,200. The consolidated cost of goods sold is calculated as P140,000 for Parent, P80,000 for Subsidiary, less P100,000 for the intercompany transfer, plus P12,000 in unrealized profit from the transfer in ending inventory, for a total of P132,000. When Parent acquired Subsidiary (SZ), the consideration transferred was P260,000 and the non-cont

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    of 1

    Chapter 17

    Multiple Choice Problems


    76. d
    Inventory
    P Company 210,000
    S Company 154,000
    Total 364,000
    Less: Unrealized profit in EI: [P140,000 x 60% = P84,000 x (140 - 112)/140] 16,800
    Consolidated 347,200

    77. d Add the two book values and remove P100,000 intercompany transfers.
    78. c Intercompany gross profit (P100,000 - P80,000) .................................................................. P20,000
    Inventory remaining at year's end ......................................................................................... 60%
    Unrealized intercompany gross profit ................................................................................... P12,000

    CONSOLIDATED COST OF GOODS SOLD


    Parent balance ................................................................................................................ P140,000
    Subsidiary balance ......................................................................................................... 80,000
    Remove intercompany transfer ...................................................................................... (100,000)
    Defer unrealized gross profit (above) ............................................................................ 12,000
    Cost of goods sold ................................................................................................................. P132,000

    79. c Consideration transferred .......................................................... P260,000


    Non-controlling interest fair value.............................................. 65,000
    SZ total fair value....................................................................... P325,000
    Book value of net assets............................................................. (250,000)
    Excess fair over book value P75,000
    Annual Excess
    Life Amortizations
    Excess fair value assigned to undervalued assets:
    Equipment............................................................................ 25,000
    5 years......................................................................P5,000
    Secret Formulas .................................................................. 50,000
    20 years.................................................................... 2,500
    Total ...................................................................................... P -0- P7,500

    Consolidated Expenses = P37,500 (add the two book values and include current year amortization expense)

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