33.On March 31,2016, Apple Inc.

exchanges P580,000 fair value consideration for 80% of the

outstanding stock of Cherry Inc. The remaining 20% of the outstanding shares continued to trade at a
collective fair value of P165,000. Cherry’s identifiable assets and liabilities each had book values that
equaled their fair values on March 31 for a net total of P500,000. During the remainder year, Cherry
generates revenues of P900,000 and expenses of P360,000 and paid no dividends. On a December 31
consolidated balance sheet, what amount should be reported as non-controlling interest on a full-fair
value basis?

A.P246,000
B.P181,000
C.P 65,000
D.P165,000

Answer: A

Book value of Stockholders Equity of Subsidiary 3/31/16................................................P 500,000

Add: Net income ( P900,000 - P360,000= P540,000x 9/12) ............................................. 405,000

Book value of SHE of Subsidiary 12/31/16.......................................................................P 905,000

Add: Adjustments to reflect fair value ................................................................................ 0

Fair value of SHE of Subsidiary 12/31/16..........................................................................P 905,000

Multiplied by Non-controlling interests percentage............................................................ 20%

Non-controlling interest (Partial Goodwill)....................................................................... P 181,000

Add:Non-controlling interest in Full Goodwill[P245,000(full)-
P180,000(partial) ................................................................ 65,000

Non-controlling Interest (Full)..................................................................................... P246,000 (A)

Computation and allocation of Goodwill:

Total Fair Value Parent Price(80%) NCI Value(20%)
Company Fair Value P745,000 P580,000 P165,000
Fair Value of net assets excluding 500,000 400,000 100,000
goodwill
GOODWILL P 245,000 P 180,000 P 65,000

34.On December 31,2016, Long Company’s stockholders’ equity includes common stock of P1,000,000
and additional paid-in capital of P600,000. Long Co. Purchased a 90% interest in Short Co. on January
1,2016, when the non-controlling interest in Short Co. Had a fair value of P230,000. No differential arose
from the business combination . During 2016, Short Co. Reports net income of P20,000 and declares
dividend of P5,000. The 2016 consolidated balance sheet includes retained earnings of
P630,000(controlling interest portion). The consolidated equity on December 31,2016:

A.P2,230.000
B.P2,254,500
C.P2,253,000
D.P2,205,500

Answer: B

Consolidated Equity:
Attributable to Parent/Contolling Interest:
Common Stock...............................................................................................P1,000,000
Additional paid-in capital.............................................................................. 600,000
Retained Earnings........................................................................................ 630,000

Equity Holders’ of Parent/Controlling Interest.............................................P 2,230,000

Non-controlling Interest:
[(P230,000 + (P20,000-P5,000] x 10% ................................................... 24,500

Consolidated Equity...........................................................................................P 2,254,500 (B)

35. On January 1, 2016, Parent Company purchased 80% of the common stock of Subsidiary Company
for P316, 000. On this date, Subsidiary Company had a common stock, other paid-in capital, and retained
earnings of P40, 000, P120, 000, P190, 000, respectively. Parent Company’s common stock amounted to
P500, 000 and retained earnings of P200, 000.
On January 1, 2016, the only tangible assets of Subsidiary that were undervalued were inventory and
building. Inventory, for which FIFO is used, was worth P5, 000 more than cost. The inventory was sold in
2016. Building which was worth P15, 000 more than book value, has a remaining life of 8 years and
straight-line depreciation is used. Any remaining excess is full-goodwill with impairment for 2016
amounting to P3, 000. Subsidiary Company reported net income of P50, 000 and paid dividends of P10,
000 in 2016 while the parent’s reported net income amounted to P100, 000 and paid dividends of P20,
000.

Determine the Consolidated Net Income Attributable to Controlling Interest/ Profit Attributable to Equity
Holders of Parent.
a. 142, 000 c. 126, 500
b. 132, 125 d. 124, 100
ANSWER:
Full-Goodwill:
 Net income from own operations:
Parent (P100, 000- (10, 000 x 80%) P92,
000
Subsidiary 50,
000
P142, 0