PROBLEM3-2

75% of the outstanding ordinary

sha.
acquired ares of S
P Corporation shara
on January 2, 2022 for P287,400. S Company's reholde
Company Di
2022 were as follows: Ordinary Shares
equity on January 2, par
d Earnings, P105,000
and Retained
P131,250; Share Premium, P52,500
NCI is measured at fair valuue.

Current fair value of S Company's identifiable net assets exceeded their

eir
book values as follows: Inventories, P18,000; Plant assets (economie li
of 10 years), P30,000; while book value of Patents exceeded their air
value (economic life of 5 years), P12,000. Both P Corporation &S
Company include depreciation expense and amortization in operating
expenses. Both companies use the straight-line method of depreciation
amortization.
and
Impairment of goodwill amounting to P4,0000 cach year is to be
recognized. Prior to acquisition, the Ordinary Shares ofP Corporation is
PI80,000, Share Premium is P75,000 and Retained Earnings is P150,000.

For the year ended December 31, 2022, P Corporation and S Company
reported the following results of operations:

P Corporation S Company
Net Income P180,000 P100,000
Dividends Paid 20,000 10,000

Required
. Prepare ALL journal entries required on the books ofP
Corporation during 2022 to account for its investment in S
Company and S Company's operating results using the Cost
Method.
2. Prepare the working paper elimination entries on December
31, 2022.
3.3 Compute thefollowing on December 31, 2022:
a. Consolidated net income attributable to the parent
b. Consolidated net income attributable to the NCI
C.
C. Consolidated retained earnings
d. Non-Controlling Interest
 purchase 80% ofrof Singer
P'rayer C'oporation
02 P37,500 of the exeau
vndnary share tor
P80,000,
sum of
Comny 's
book value of nct asscts) is attribut. able to
consueraton anud NCI
lcss
asset witlh cconomic life of ten
balance to depreciable
mdwill and the mcasured at fair value
ue oon
contolling interest is
n
date of
(10) vears. Non sharcholder's equity of
the date of acquisition,
of two
quisition, On
follows:
Companies are aN

Prayer orporation Singer Company

Ordinary Share
PI,312,500 P300,000
Retained arning8
1,950,000 525,000
On December 31, 2022, Singer Company reported of
net income P131 2Ko
and paid dividends of P45,000 to Prayer. Prayer reported earnings from its
own operations of P356,250
and paid dividends of P172,500, Glood
had been impaired and should be reported at P7,500 on December 31
2022.

Required
What is the consolidated net income on December 31, 2022?
2. What is thee NCI in net income of Singer Company on December
31, 20222
3.3 What is the cosolidated net income attributable to parent
shareholders on December 31, 2022?
How much consolidated retained
earnings should be reported on
December 31, 2022?
5. What amount of NCI is to be
consolidated
presented in the Consolidated
Statement of Financial Position as of December 31, 2022?
Compute the C'onsolidated Equity as of December 31, 2024.
PROBLEM3-6 ontrolling

On January
Paul Company
2, 2022,
Company for P4,125,000 cash. On this
acquired 80% interest in
date, the
share capital
and accumulated
profits of outstanding Micah
Company
are as follows: Paul
Company andordinary
Micah
Micah
Ordinary share capital
Paul
P 2,250,000
P
Micah
Share premium 1,312,000
1,750,000o
Accumulated profits (losses)
5,520,000 3,187,500
Thore was no issuance of ordinary Shares during the
c t is initially measured at fair value. Fair value year. Non-controllin
of the following assets
of Micah exceeded their book values as follows:
Inventories, P210.000:
Property and equipment (useful life, years), P127,500. All other assets
I0
and liabilities are fairly valued. Goodwill if any is not
impaired. On
December 31, 2022, the two companies reported the following operating
results:
 Paul Micah
P 1,825,00o P 975,000
Net income
Dividends paid 525,000 262,500
Required
1. How much is the non-controlling interest in net income
income ofof
subsidiary?
2 What is the consolidated net income attributable to
to parent
shareholders?
3. How much consolidated retained earnings should be reportedon
December 31, 2022?
4. How much is the non-controlling interest in net assets of
subsidiary?
5 Compute the Consolidated Equity as ofDecember 31, 2022.
 PROBLEM 3- 11
in Expanded Co
an 80/%
interest
pany on
acquired the share capital an
Growth
Corporation
2022 for
P245,000. On this date retained
January , were as follows:
companies
carnings of two Growth
Expanded
P630,000 P175,000
Share Capital 280,000
Retained Earnings
35,000
of Expanded were fair values wh
stated at their
The assets and liabilities
80% interest and the proportionate share in net
Gnowth acquired its
measure the NCI. Growth uses the
identifiable asset was used to initially
for its investment in Expanded.
u s t method to account

Net income and dividends for 2022 for the affiliated companies were:
Growth Expanded
Net Income P120,000 P45,000
Dividends Paid 44,000 17,000
Dividends Payable, 12/31/2022 31,000 8,000

End of the year evaluation indicates P2,400 partial impairment in

m
goodwill.

How much is the consolidated retained ber 31, 202

earnings at December 51, 40