48.

b
At the end of two years, the subsidiary reports the equipment at original cost of P2,500,000 and
accumulated depreciation of (P2,500,000/10) x 2 = P500,000. Depreciation expense is P250,000.

The consolidated balance sheet reports the equipment at original cost of P1,000,000 and accumulated
depreciation of P200,000 + ([(P1,000,000 - P200,000)/10] x 2) = P360,000.
Depreciation expense is P80,000.

Eliminating entries at the end of the second year are:

Accumulated depreciation 170,000

Investment in subsidiary 1,530,000
Equipment 1,700,000

Equipment 200,000
Accumulated depreciation 200,000

Accumulated depreciation 170,000

Depreciation expense 170,000
49. d
50. d
The subsidiary reports depreciation expense for the year at P500,000 (P2,500,000/5) and a gain on the sale
at P1,750,000 [P2,750,000 - ((P2,500,000 - (3)(P500,000))]. The consolidated statements show
depreciation expense for the year at P600,000 (P3,000,000/5) and a gain on the sale at P1,550,000
[P2,750,000 - ((P3,000,000 - (3)(P600,000))]. Therefore the eliminating entries increase depreciation
expense by P100,000 and reduce the gain by P200,000, for a net effect on consolidated income of:
P300,000 decrease.
51. a
Consolidated Net Income for 20x9
P Company’s net income from own/separate operations…………. P 140,000
Realized gain on sale of equipment (downstream sales) through depreciation ___0
P Company’s realized net income from separate operations*…….….. P 140,000
S Company’s net income from own operations…………………………………. P 30,000
Unrealized loss on sale of equipment (upstream sales) 20,000
Realized loss on sale of equipment (upstream sales) through depreciation –
none, since the date of sale is end of the year ( 0)
S Company’s realized net income from separate operations*…….….. P 50,000 50,000
Total P190,000
Less: Amortization of allocated excess…………………… 0
Consolidated Net Income for 20x9 P190,000
Less: Non-controlling Interest in Net Income* * 15,000
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent – 20x9………….. P175,000
*that has been realized in transactions with third parties.

Selling price P180,000

Less: Book value, 12/31/20x9
Cost, 1/1/20x4 P500,000
Less: Accumulated depreciation : P500,000/10 years x 6 years 300,000 200,000
Unrealized loss on sale of equipment P( 20,000)
Realized loss – depreciation: P20,000/4 years P( 5,000)

Or, alternatively
Consolidated Net Income for 20x9
P Company’s net income from own/separate operations…………. P 140,000
Realized gain on sale of equipment (downstream sales) through depreciation ___0
P Company’s realized net income from separate operations*…….….. P 140,000
S Company’s net income from own operations…………………………………. P 30,000
Unrealized loss on sale of equipment (upstream sales) 20,000
Realized loss on sale of equipment (upstream sales) through depreciation ( 0)
 S Company’s realized net income from separate operations*…….….. P 50,000 50,000
Total P190,000
Less: Non-controlling Interest in Net Income* * P 15,000
Amortization of allocated excess…………………… ____0 15,000
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent………….. P175,000
Add: Non-controlling Interest in Net Income (NCINI) _ 15,000
Consolidated Net Income for 20x9 P190,000
*that has been realized in transactions with third parties.

**Non-controlling Interest in Net Income (NCINI) for 20x9

S Company’s net income of Subsidiary Company from its own operations P 30,000
(Reported net income of S Company)
Unrealized loss on sale of equipment (upstream sales) 20,000
Realized loss on sale of equipment (upstream sales) through depreciation ( 0)
S Company’s realized net income from separate operations……… P 50,000
Less: Amortization of allocated excess 0
P 50,000
Multiplied by: Non-controlling interest %.......... 30%
Non-controlling Interest in Net Income (NCINI) - partial goodwill P 15,000
Less: NCI on goodwill impairment loss on full-goodwill . . . . . . . . . . . . . . . . . . . . . 0
Non-controlling Interest in Net Income (NCINI) – full goodwill . . . . . . . . . . . . . P 15,000

52. b
Consolidated Net Income for 20y0
P Company’s net income from own/separate operations…………. P 162,000
Realized gain on sale of equipment (downstream sales) through depreciation ___0
P Company’s realized net income from separate operations*…….….. P 162,000
S Company’s net income from own operations…………………………………. P 45,000
Unrealized loss on sale of equipment (upstream sales)
Realized loss on sale of equipment (upstream sales) through depreciation ( 5,000)
S Company’s realized net income from separate operations*…….….. P 40,000 40,000
Total P202,000
Less: Amortization of allocated excess…………………… 0
Consolidated Net Income for 20y0 P202,000
Less: Non-controlling Interest in Net Income* * 7,500
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent – 20y0………….. P194,500
*that has been realized in transactions with third parties.

Or, alternatively
Consolidated Net Income for 20y0
P Company’s net income from own/separate operations…………. P 162,000
Realized gain on sale of equipment (downstream sales) through depreciation ___0
P Company’s realized net income from separate operations*…….….. P 162,000
S Company’s net income from own operations…………………………………. P 45,000
Unrealized loss on sale of equipment (upstream sales)
Realized loss on sale of equipment (upstream sales) through depreciation ( 5,000)
S Company’s realized net income from separate operations*…….….. P 40,000 40,000
Total P202,000
Less: Non-controlling Interest in Net Income* * P 7,500
Amortization of allocated excess…………………… ____0 7,500
Controlling Interest in Consolidated Net Income or Profit attributable to
equity holders of parent………….. P194,500
Add: Non-controlling Interest in Net Income (NCINI) _ _ 7,500
Consolidated Net Income for 20y0 P202,000
*that has been realized in transactions with third parties.

**Non-controlling Interest in Net Income (NCINI) for 20y0

S Company’s net income of Subsidiary Company from its own operations P 30,000
(Reported net income of S Company)
Unrealized loss on sale of equipment (upstream sales)
Realized loss on sale of equipment (upstream sales) through depreciation ( 5,000)
S Company’s realized net income from separate operations……… P 25,000
 Less: Amortization of allocated excess 0
P 25,000
Multiplied by: Non-controlling interest %.......... 30%
Non-controlling Interest in Net Income (NCINI) - partial goodwill P 7,500
Less: NCI on goodwill impairment loss on full-goodwill . . . . . . . . . . . . . . . . . . . . . 0
Non-controlling Interest in Net Income (NCINI) – full goodwill . . . . . . . . . . . . . P 7,500

53. d
Eliminating entries:
1/1/20x5: date of acquisition
Restoration of BV and eliminate unrealized gain
Building 3,000
Gain 8,250
Accumulated depreciation 11,250

Parent Books – Sky Subsidiary Books - Earth

Cash 33,000 Building 33,000
Accumulated depreciation 11,250 Cash 33,000
Building 36,000
Gain 8,250

Sky, 7/1/20x4
Selling price P33,000
Less: Book value, 7/11/20x4
Cost, 1/1/20x2 P36,000
Less: Accumulated depreciation : P36,000/8years x 2.5 years 11,250 24,750
Unrealized gain on sale of equipment P 8,250
Realized gain – depreciation: P8,250/5.5 years P 1,500

54. a - refer to No. 53 for computation

55. b
Eliminating entries:
12/31/20x4: subsequent to date of acquisition
Realized Gain – depreciation (July 1, 20x4 – December 31, 20x4)
Accumulated depreciation 750
Depreciation expense 750
P8,250 / 5.5 x ½ years or P3,000 – P2,250
“Should be in CFS” Parent Books – Sky “Recorded as” Subsidiary Books - Earth
Depreciation expense Depreciation expense
(P24,750 / 5.5 x ½ years) 2,250 (P33,000 / 5.5 years x ½ yrs) 3,000
Acc. Depreciation 2,250 Acc. depreciation 3,000

56. c
Eliminating entries:
12/31/20x5: subsequent to date of acquisition
Realized Gain – depreciation
Accumulated depreciation 1,500
Depreciation expense 1,500
P8,250 / 5.5 x years or P6,000 – P4,500

“Should be in CFS” Parent Books – Sky “Recorded as” Subsidiary Books - Earth
Depreciation expense Depreciation expense
(P24,750 / 5.5 years) 4,500 (P33,000 / 5.5 years) 6,000
Acc. Depreciation 4,500 Acc. depreciation 6,000

57. d
Eliminating entries:
1/1/20x5: subsequent to date of acquisition
Building 3,000
Retained earnings (8,250 – 750) 7,500
Accumulated depreciation (P11,250 – P750) 10,500