Since 1977
AFAR
3006-CONSOSOLIDATED STATEMENTS
LECTURE NOTES
Consolidated financial statements- are the financial
statements of a group presented as those of a single
economic entity. Group is a parent and all of its
subsidiaries.
Separate financial statements – are those presented by a
parent, an investor in an associate, or a venturer in a
jointly controlled entity, in which the investments are
accounted for on the basis of the direct equity interest
rather than on the basis of the reported credits, and the
net assets of the investee.
PRESENTATION OF CONSOLIDATED FINANCIAL
STATEMENTS
A parent shall present consolidated financial statements,
except when
• The parent is itself a wholly-owned subsidiary, or is a
partially-owned subsidiary of another entity
• The parent’s debt or equity instruments are not traded
in a public market
• The parent did not file, nor is in the process of filing,
its financial statements with a securities commission
for the purpose of issuing any class of instruments in a
public market
• The ultimate parent produces consolidated financial
statements available for public use
Summary of Critical Points:
1. Consolidated statements are prepared from the
separate statements of the acquiring company and
acquired company(ies) from the standpoint of a single
economic entity.
2. Consolidation procedures are necessary whenever a
parent and a subsidiary relationship existed, except if
the parent is exempted under PAS 27 to present
consolidated financial statements.
3. The acquiring company, generally, is a parent if it
owns, directly and indirectly, more than 50% of the
outstanding voting shares of the acquired company. If
the controlling interest is not 100%, the remainder
would represent the non-controlling interest.
4. The following steps summarize the consolidation
worksheet procedures.
a. Prepare a schedule of excess to determine if there
is either goodwill, or, income froreserves 9BCVR-
.m acquisition. This will also be the basis in
formulating the working paper elimination entries.
b. If the working paper is intended to prepare post
acquisition consolidated statements, computations
must show the amortization for business
combination valuation reserves (BCVR). BCVR is
the difference between book values and fair values
of the net assets of the acquired company at at
the date of acquisition (DOA).
DETERMINATION OF GOODWILL
An important aspect of accounting for business
combination, especially when control is less than 100%, is
the computation of goodwill or excess in combination.
GOODWILL = Fair value of consideration transferred +
Amount of non-controlling interest (NCI)* + Fair value of
previously-held equity interest LESS the FV of net
identifiable assets of the acquiree
7
Page 1 of 5 www.prtc.com.ph
DE LEON/DE LEON/DE LEON/TAN
MAY 2021
* Under revised provisions of IFRS3 (and also IFRS 10),
the non-controlling interest may be measured at either:
(1) full fair value or (2) as a proportionate share in the fair
value of identifiable net assets at the date of acquisition.
These allowed alternatives result in goodwill being
computed in two different amounts.
1. Example: NCI measured at fair value. (Adapted from
Wiley)
Konin Corporation (KC) acquires a 75% interest in
Danube Corporation (DC), in exchange for cash of
P350,000. DC has 25% of its shares traded on an
exchange. KC acquired the 60,000 non-publicly traded
shares outstanding. The fair value of DC’s identifiable
net assets is P300,000; the shares of BC at the
acquisition date are traded at P5 per share. The
consideration transferred indicates that KC has paid a
control premium of P50,000 (P350,000 – [P5 x
60,000])
Under the full fair value approach, the NCI is
measured based on the trading price of the shares of
entity BC at the date control is obtained by KC (P5 per
share) and a value of P100,000 is assigned to the 25%
NCI. Goodwill is recognized at P150,000 [(P350,000 +
P100,000) – P300,000]. The amount of goodwill
accruing to the controlling interest is P125,000
(P350,000 – [P300,000 x 75%]) and the amount of
goodwill accruing to the NCI is P25,000 (P100,000 –
[P300,000 x 25%]).
2. Example: NCI measured at its proportionate share of
acquiree’s identifiable net assets (Adapted from
Wiley).
Under this alternative method, NCI will be assigned a
value of P75,000 (P300,000 x 25%) and the goodwill
recognized is P125,000 [(P350,000 + P75,000) –
P300,000]. This amount represents only the acquirer’s
share, which is (P350,000 – [P300,000 x 75]). No
goodwill is assigned to the NCI.
Bargain Purchases (negative goodwill) occurs when the
value of net assets acquired is in excess of the
acquisition-date fair value of the consideration transferred
plus the amount of any non-controlling interest and plus
fair value of the acquirer’s previously held equity interest.
When this occurs, and after a complete review of the
computations involved, a gain on acquisition is recognized
in the profit or loss at the acquisition date, as part of
income from continuing operations.
1. Example (Adapted from Wiley)- NCI is assigned full
FV.
On January 1, 2019, Konin Corporation (KC) acquires
75% of the equity interests of Laska Corporation (LC),
a private entity, in exchange for cash of P250,000.
The former owners of LC were forced to sell their
investments within short period of time and unable to
market LC to multiple potential buyers in the
marketplace. The management of KC initially
measures at the acquisition date the separately
recognizable identifiable assets acquired at P500,000
and liabilities of P100,000. KC engages an
independent valuation specialist who determines that
the fair value of the 25% NCI in LC is P110,000. KC
AFAR 3006
 EXCEL PROFESSIONAL SERVICES, INC.

concludes after a review that the procedures and controlling interest. Such re-measurement and
resulting measures are correct. amortization later will affect both the controlling
interest and the non-controlling interests. The same
The acquirer (KC) recognizes the gain on its treatment is done for grossed-up goodwill, re-
acquisition of the 75% interest as follows: measurement and amortization, if any, will all be in
Identifiable net assets acquired at Fair Value P400,000 the ownership ratios between the parent and the NCIs.
Less FV of payment for 75% interest P250,000
FV assigned to NCI at DOA 110,000 360,000 6. Working paper elimination entries orchestrate the
Gain on bargain purchase P 40,000 items and balances that must comprise the
consolidated statements. Their two basic objectives
2. NCI measured at proportionate share of identifiable are (1) to eliminate intercompany balances and (2) to
net assets at DOA. Since the amount of NCI to be make adjustments to or set-up some items in order to
assigned would be P100,000 (P400,000 x 25%), the conform with purchase principles.
gain on bargain purchase would be P50,000 (P400,000
– [P250,000 + P100,000]). 7. In purchase combination, for example, working paper
elimination entries aim to accomplish the following:
Other relevant considerations follow: a. Eliminate inter-company balances
FULL PROP. SHARE IN FAIR b. Make adjustments for acquired assets and
PARTICULARS FAIR VALUE VALUE OF NET ASSETS assumed liabilities to comply with fair value
GW (for N-SMEs) Grossed-up Not grossed-up considerations.
GW (for SMEs) Not assigned Not grossed-up c. Set up goodwill or income from acquisition into
the consolidated statements.
IFA (N-SMEs/SMEs) *** *** d. Amortize increase/decrease in value of net assets
*** Either method could be used but the different and measure their effects in the consolidated
computed amount of income from combination would financial statements,
accrue only to the acquirer. e. Make adjustments to consolidated amounts as a
result of inter-company transactions.
For non-SMEs, in a goodwill situation, the full fair value f. And for a variety of other consolidation
method is preferred over the other method if the problem requirements.
is silent. The NCI’s FV is deemed proportionate with that
of the parent’s if the former is not available. 8. Two working paper methods may actually be used to
consolidate the financial statements for the group, the
In a bargain purchase situation, if the problem is silent, direct method and the working paper entry method. The
assign to NCI its proportionate share in identifiable net former uses business combination valuation reserve
assets at DOA. balances (BCVR for short), while the latter deals with
working paper elimination entries (WPEE for short).
Subsequent accounting for goodwill arising from the Basically, in the working papers, similar items from the
acquisition is as follows: parent’s records and from the subsidiary’s records are
Non-SMEs SMEs simply combined, plus/minus any working paper
Amortization No Yes* adjustments (BCVRs or WPEEs) affecting such items. To
Impairment loss Yes Yes illustrate the consolidation concept and process, the two
* Use 10 years to amortize if period is not given. methods are both used over relevant illustrative cases
5. Increase/decrease to fair value of net asset items are
recognized in full regardless of the extent of the non-

ILLUSTRATIVE CASES
3. Prepare WPEE for the consolidated balance sheet at
Case 1. Working Paper Elimination Entries (WPEEs) January 1, 2020 (DOA).
at Date of Acquisition.
On January 1, 2020, PULLET COMPANY (a non-SME)
purchased interest in HENNY ENTERPRISES. On this date, Case 2. Alternative amounts assigned to NCI and
HENNY has 80,000 outstanding shares with a fair value per goodwill/income from acquisition at date of acquisition.
share of P55. The book values and the fair values of
HENNY’s net assets were as follows: ALBANY COMPANY acquired 80% of the issued share
Book Values Fair Values Difference capital of BUTCHER ENTERPRISES on December 31, 2020
Cash P 368,640 P 368,640 -- for a total consideration of P1,440,000 (at P17.60 per
Accounts receivable 221,184 221,184 - share plus control premium). At this date, the identifiable
Inventory 884,736 1,105,920 221,184 net assets of BUTCHER ENTERPRISES which were carried in
Buildings, net 2,285,568 2,359,296 73,728 its books at P1,200,000, were deemed to have a fair value
Equipment, net 737,280 589,824 (147,456) of P1,600,000. Share capital of BUTCHER ENTERPRISES
LTI 1,474,560 2,138,112 663,552 comprised 100,000 shares, which were traded at the stock
P 5,971,968 P6,782,976 exchange on 31 December 2020 at P17.60 per share.
Current liabilities P 737,280 P 737,280 -
Bonds payable 1,548,288 1,908,928 (360,640) Required: Determine the allowed alternative amounts that
Ordinary shares 1,474,560 may be assigned to NCI at date of acquisition.
Retained profit 2,211,840 4,136,768 450,368 a. Based on fair value of shares acquired, and
P 5,971,968 P 6,782,976 b. Based on fair value of identifiable net assets of the
subsidiary.
Assume PULLET COMPANY acquires an 100% interest in
c. Determine goodwill or income from acquisition over
DOME ENTERPRISES for P5,570,000.
Required: each of the alternative assumptions.
1. Calculate the control premium paid by PULLET. Case 3. Using the data in Case 1 for the PULLET
2. Calculate the goodwill from the acquisition. COMPANY and HENNY ENTERPRISES, assume PULLET
acquires an 80% interest in HENNY for P3,560,000.

Page 2 of 5 www.prtc.com.ph AFAR 3006

EXCEL PROFESSIONAL SERVICES, INC.

Equipment 450,000 470,000

Required: Patent - 40,000
a. How much is the control premium paid by PULLET? P 840,000 P1,050,000
b. Prepare WPEE at the date of acquisition under each
of the alternative amounts that can be assigned to All other assets and liabilities had carrying values
NCI. Show supporting computations in good form. approximately equal to their respective fair values. On
January 1, 2019, the building had a remaining useful life of
Case 4. Simple Consolidation Process at Date of 20 years. Equipment and the patent had remaining useful
Acquisition lives of 10 years each.
PURE LEMON CORPORATION acquired 100% of the issued
share capital of DOME COMPANY for P1,600,000. Their Looking farther ahead, assume that goodwill was impaired
balance sheets at the acquisition date, January 1, 2020, by P5,000 in 2019 and by P8,000 in 2020.
are as follows. Requirements:
Pure Lemon Dome 1. Prepare preliminary computations for the following:
Land P3,200,000 P1,200,000 a. Percentage of control
Invest. in Seabed 1,600,000 b. Non-controlling interest (under each of 2 methods
Accounts receivable 800,000 160,000 of measuring NCI) at date of acquisition (DOA)
Cash 480,000 240,000 c. Goodwill or gain from bargain purchase under each
P6,0800,000 P1,600,000
of 2 methods of measuring the NCI.
2. Prepare working paper elimination entries (WPEEs) at
Share capital P4,000,000 P 800,000
Retained profit 1,280,000 560,000 January 1, 2019 (DOA)
Accounts payable 800,000 240,000 3. Prepare working papers for the consolidated balance
P76,080,000 P1,600,000 sheet at DOA, using WPEEs.
4. Prepare a schedule of amortization of EXCESS:
The net asset items of DOME are fairly valued. business combination valuation reserves (BCVR) for
years 2019 and 2020. Include impairment losses on
On the date of the above acquisition, the parties have
agreed to include DOME’s pending lawsuit as part of the goodwill.
acquisition. The lawyer advised that there was a 40% 5. Prepare a schedule of unamortized EXCESS as of
chance that the company would lose the case and would January 1, 2019, December 31, 2019, and December
then have to pay P80,000. 31, 2020.
Required: 6. Prepare a consolidated balance sheet on January 1,
1. Prepare a complete analysis of the fair value of the 2019, using BCVR balances as of that date.
investment cost in determining goodwill/negative
goodwill. Case 6. Consolidated Financial Statements
2. Prepare working paper elimination journal entries. subsequent to date of acquisition.
3. Prepare a consolidation worksheet in preparing the PARENT accounts for its investment under the COST
consolidated balance sheet at January 1, 2020. method.
Continuing with Case 5, financial data for the two
Case 5. Consolidated FS at the date of Acquisition. companies under the cost method for the years ended
On January 1, 2019, PARENT COMPANY purchased 24,000 December 31, 2019 and 2020 are as follows.
shares of SUBSIDIARY, INC. in the open market for 2019 2020
P756,000. The balance sheets of PARENT and SUBSIDIARY Comprehensive P S P S
Income COMPANY COMPANY COMPANY COMPANY
as at this date are presented below:
Sales 1,200,000 700,000 1,500,000 900,000
Dividend 48,000 92,000
PARENT SUBSIDIARY income
Cash P 109,000 P 15,000 Cost of sales (500,000) (250,000) (600,000) (315,000)
Accounts receivable 300,000 35,000 Expenses (400,000) (252,000) (480,000) (300,000)
Inventories 140,000 40,000 Net income P 348,000 P198,000 P 512,000 P285,000
Retained Earnings
Land - 150,000 R. E. , Jan 1 780,000 400,000 978,000 538,000
Dividend paid (150,000) (60,000) (210,000) 115,000)
Buildings - 200,000
Net income 348,000 198,000 512,000 285,000
Equipment 250,000 450,000 R. E., Dec 31 P 978,000 P538,000 P1,280,000 P708,000
Investment in 756,000
Subsidiary Balance sheet
Totals P 1,555,000 P 890,000 Cash P 233,600 P 48,000 P 224,400 P 98,000
Accounts 240,000 70,000 300,000 160,000
Accounts payable P 175,000 P 190,000 receivable
Share capital, P50 par 200,000 Inventories 150,000 80,000 180,000 150,000
Share capital, P10 par 300,000
Land 150,000 150,000
Share premium 400,000 Buildings 190,000 180,000
Retained earnings, 780,000 400,000 Equipment 349,000 405,000 500,000 360,000
January 1 Investment in 756,000 756,000
Totals P 1,555,000 P 890,000 Subsidiary
Totals P1,728,600 P943,000 P1,960,400 1,098,000
At the acquisition date, the following net asset items of Accounts P 150,600 P105,000 P 80,400 90,000
SUBSIDIARY, INC. had carrying values that were different payable
Share capital,
from their respective fair values:
P50 par 200,000 200,000
Carrying Fair Values Share capital,
Amount P10 par 300,000 300,000
Inventories P 40,000 P 70,000 Share
Land 150,000 200,000 premium 400,000 400,000
Buildings 200,000 270,000

Page 3 of 5 www.prtc.com.ph AFAR 3006

EXCEL PROFESSIONAL SERVICES, INC.
Retained 3. Show the consolidated net income for 2018, 2019 &
earnings, Dec. 2020. Allocate each to Controlling and non-controlling
31 978,000 538,000 1,280,000 708,000 interests.
Totals P1,728,600 P943,000 P1,960,400 1,098,000
4. Elimination entries for 2018, 2019, and 2020.
Requirements for Years 2019 and 2020
Case 10. (Upstream depreciable asset transfer)
1. Calculate the parent’s investment income
On January 1, 2019, Satellite, INC. a 90% owned
2. Calculate the NCI’s share in the consolidated net subsidiary of PORT COMPANY transferred equipment to its
income. parent in exchange for P115,200 cash. At the date of
3. Calculate the transfer, the subsidiary’s record carried the equipment at a
a. Consolidated net income cost of P162,816 less accumulated depreciation of
b. Consolidated net income attributable to owners of P69,120. The equipment has an estimated remaining life
of 7 years. The subsidiary reported net income for 2019
Parent Company.
and 2020 of P 202,752 and P302,592, respectively. The
c. Non-controlling interest in consolidated net income parent company reported income of P 337,920 (including
4. Prepare consolidated financial statements for 2019 and dividend income of P 69,120) and P453,120 (including
2020 using WPEEs. dividend income of 69,120) for 2019 and 2020,
5. Prepare consolidated financial statements for 2019 and respectively.
2020 using BCVR balances. Requirements
6. Prepare analytical check on the NCI amount in the 1 Calculate Port Company’s investment income from
Satellite Company in 2019 and in 2020.
consolidated balance sheet for 2019 and 2020.
2. Determine non-controlling interest in the net income of
the subsidiary for 2019 and for 2020.
Case 7. Separate FS of the parent company under the 3. Show the consolidated net income for 2019 and 2020.
equity method. Allocate each to Controlling and Non-controlling
interests.
Using the cost method FS in Case 6 above, recalculate the 4. Elimination entries for 2019 and for 2020.
following balances for 2019 and 2020 (in the separate FS
Case 11. (Intercompany Transactions)
of PARENT COMPANY) if the parent used the equity method
On January 1, 2019, PRIMARY COMPANY acquired 75% of
in accounting for the investment account: the outstanding shares of SECONDARY, INC. at a fair value
a. Net income differential of P25,600 represented by understated plant
b. Investment in Subsidiary assets with a 10-year remaining life. During 2020,
c. Retained earnings. PRIMARY COMPANY purchased merchandise from
secondary, inc. in the amount of P 204,800 at billed prices.
Case 8 (Upstream Merchandise Transfer) SECONDARY, INC. shipped the merchandise at 40% above
STAREX, INC., a 75% owned subsidiary of PUREHATCH its cost, and this pricing policy was also used for shipments
COMPANY, sold merchandise during 2020 to its parent made in 2019 to PRIMARY COMPANY. The inventories of
company for P 288,000. The merchandise cost STAREX, PRIMARY COMPANY included merchandise at billed prices
INC. P 201,600, 25% of the transferred merchandise from SECONDARY, INC. as follows:
remained in PUREHATCH COMPANY’s ending inventory.
STAREX’s gross profit has been the same rate over the January 1, 2020 57,344
past three (3) years. On January 1, 2020, PUREHATCH has December 31, 2020 43,008
P9,600 worth of merchandise purchased from STAREX in
2019. For the year 2020, STAREX, INC. reported a net Also, in 2019 PRIMARY COMPANY sold land to SECONDARY,
income of P 288,000 and PUREHATCH COMPANY reported INC. for P102,400. The cost of the land to PRIMARY was
net income (including dividend income of P 115,200) of P P76,800. SECONDARY sold the land to an outsider for
528,000. P117,760 in 2020.
Requirements:
1. Calculate Purehatch Company’s investment income Furthermore, on January 1, 2020 SECONDARY, INC. sold
from Starbucks, Inc. in 2020. equipment to PRIMARY COMPANY for P38,400 cash. At the
2. Determine non-controlling interests in the net income date of the transfer, the equipment is carried at a cost of
of the subsidiary for 2020. P54,272 less accumulated depreciation of P23,040. The
3. Show consolidated net income for 2020, and allocate to equipment has an estimated remaining life of 7 years.
Controlling interests and to Non-controlling interests.
4. Working paper elimination entries for 2020. Income statements for the two companies for the year
2020 are as follows:
Case 9 (Downstream Land Transfer) PRIMARY SECONDARY
During 2018 PRIME COMPANY sold land with a cost of Sales P1,024,000 P512,000
P230,400 to its 80% owned subsidiary, SPEAR, INC., for P Cost of sales 409,600 256,000
307,200. The subsidiary sold the land in 2020 to an Gross profit 614,400 256,000
outsider for P430,080. The subsidiary and the parent Operating expenses 368,640 163,840
reported net income as follows: Operating income 245,760 92,160
PRIME CO SPEAR, INC Gain on sale of land 15,360
2018 P539,136 236,544 Gain on sale of equipment _________ 7,168
2019 514,560 228,864 Net income P 245,760 P 114,688
2020 606,720 253,440 Requirements:
1. Calculate the non-controlling interests in the
The reported income of the parent company includes consolidated net income in 2020.
P78,336 of dividend income each year. 2. Calculate the controlling interest in the consolidated
Requirements: net income in 2020.
1. Calculate Prime Company’s investment income from 3. Prepare working paper elimination entries for the
Spear Company in 2018, 2019, and 2020. above information at December 31, 2020.
2. Determine non-controlling interest in the net income of 4. Prepare a consolidated income statement for the year
the subsidiary in 2018, 2019 and 2020. ended December 31, 2020.

Page 4 of 5 www.prtc.com.ph AFAR 3006

EXCEL PROFESSIONAL SERVICES, INC.

MULTIPLE CHOICE

English Dom Corporation owns 100% of Purebreed Retained Earnings 89,600 40,000
Enterprises. On July 1, 2020, English Dom sold Purebreed Total Equities. 492,000 216,800
delivery equipment at a gain. English Dom had owned the At the date of combination the book values of Squidball’s net
equipment for two years and used a five-year straight-line assets was equal to the fair value of the net assets except for
depreciation rate with no residual value. Purebreed is using a Squidball’s inventory which has a fair value of P24,000.
three-year straight-line depreciation rate with no residual 5. What amount of goodwill will be reported?
value for the equipment. a. P12,534 c. P48,800
1. In the consolidated income statement, Purebreed’s b. P30,200 d. P40,267
recorded depreciation expense on the equipment for 2020
will be decreased by: 6. What amount of total liability will be reported?
a. 16.67% of the gain on sale a. P139,200 c. P170,400
b. 33.33% of the gain on sale b. P227,466 d. P 72,534
c. 50% of the gain on sale
d. 100% of the gain on sale 7. What is the amount of total assets?
a. P 501.334 c. P 601,066
Parker Corporation sells equipment with a book value of b. P 548,800 d. P 591,000
P64,000 to Sheaffer Enterprises, its 75%-owned subsidiary,
for P80,000 on January 1, 2020. Sheaffer determines that the On January 1, 2020, Pelican Company purchased 90% of the
remaining useful life of the equipment is four years and that common stock of Bryan Company for P51,840 over the book
straight-line depreciation is appropriate. The December 31, value of the shares acquired. All of the differential was related
2020 separate company financial statements of Parker and to land held by Bryan. On May 1, 2020, Bryan sold the land
Sheaffer show equipment-net of P400,000 and P240,000, at a gain of P92,800. For the year 2020, Bryan reported net
respectively. income of P211,840 and paid dividends of P51,200. Pelican
2. The consolidated equipment-net will be: reported income from its own separate operations of
a. P 640,000 c. P624,000 P421,760 and paid no dividends.
b. P 628,000 d P520,000 8. Consolidated net income for 2020 was
a. P 527,360 c. P 643,456
Balance sheet data for P Corporation and S Company on b. P 560,576 d. P 576,000
December 31, 2020, are given below:
P Corporation S Company On January 1, 2020 the Parent Corporation sold equipment to
Cash P 56,000 P 72,000 its wholly-owned subsidiary, Subsidiart Enterprises, for
Merchandise P1,152,000. The equipment cost Parent
Inventory 80,000 48,000 CompanyP1,280,000; accumulated depreciation at the time
Property and of the sale of P320,000. The parent was depreciating the
equipment (net) 400,000 200,000 equipment on the straight-line-method over twenty years
Investment in S with no salvage value, a procedure that the subsidiary
Company 208,000 ________ continued.
Total assets P 744,000 P320,000 9. On the consolidated balance sheet at December 31, 2020
the cost and accumulated depreciation, respectively,
Current liabilities P144,000 P 48,000 should be:
Long term liabilities 160,000 72,000 a. P 960,000 and P384,000
Common stock 240,000 80,000 b. P1,152,000 and P 64,000
Retained earnings 200,000 120,000 c. P1,152,000 and P320,000
Total liabilities & SE P 744,000 P320,000 d. P1,280,000 and P384,000

P Corporation purchased 80% interest in S Company on P Company acquired a 65% interest in S company in 2017.
December 31, 2020 for P208,000. S Company’s property and For years ended December 31, 2019 and 2020, S reported
equipment had a fair value of P40,000 more than the book net income of P208,000 and P249,600, respectively. During
value shown above. All other book values approximated fair 2019, S sold merchandise to P for P44,800 at a cost of
value. In the consolidated balance sheet on December 31, P34,560. Two-fifths of the merchandise was later resold by P
2020. to outsiders for P24,320 during 2020. In 2020, P sold
3. The amount of total stockholders’ equity to be reported will merchandise to S for P62,720 at a profit of P15,360. One-
be fourth of the merchandise was resold by S to outsiders for
a. P 440,000 c. P 600,000 P19,200 during 2020.
b. P 488,000 d. P 492,000 10. Non-controlling- interest net income in 2019 is
a. P 73,664 c. P 71,366
4. The amount of non-controlling interest will be b. P 96,710 d. P 70,726
a. P 40,000 c. P 88,000 11. Non-controlling- interest net income in 2020 is
b. P 48,000 d. P 52,000 a. P 88,794 c. P 86,259
b. b. 92,077 d. P 88,218
On January 1, 2020. SHELLFISH CORPORATION purchased
75% of the common stock of SQUIDBALL COMPANY. Separate CORN Corporation sells equipment with a book value of
balance sheet data for the companies at the combination date P128,000 to BEANS Company, its 75% owned subsidiary for
are given below: P102,400 on April 1, 2020. BEANS determines that the
Shellfish Squidball remaining useful life of the equipment is four years and that
Cash 9,600 82,400 the straight-line depreciation is appropriate. The December
Accounts Receivables 57,600 10,400 31, 2020 separate financial statements of CORN and BEANS
Inventory 52,800 15,200 show equipment-net of P 640,000 and P384,000,
Land 31,200 12,800 respectively.
Plant Assets 280,000 120,000 12. Consolidated equipment-net will be
Accum. Depreciation (96,000) (24,000) a. P 791,360 c. P1,044,800
Invesment in Squidballl 156,800 _______- b. P 848,960 d. P 975,040
Total Assets 492,000 216,800
Accounts Payable 82,400 56,800
Capital Stock 320,000 120,000

Page 5 of 5 www.prtc.com.ph AFAR 3006