FINAL EXAMINATION 10 POINTS EACH

1. Jessica Bakery owns 60% of the stock of Carla Products acquired several years ago at book value. On January 1, 2018, inventory reported by
Jessica included 20,000 bags of flour purchased from Carla Products at P90 per bag. By December 31, 2018, all these beginning inventory
purchased form Carla Products had been baked into products and sold to customers by Jessica Bakery. There were no transactions between
Jessica Bakery and Carla Products during 2018. Both Jessica Bakery and Carla Products price their sales at cost plus 50% mark-up for profit.
Jessica Bakery reported income from its baking operations of P3,000,000 and Carla Products reported net income of P2,500,000 for 2018. Compute
the consolidated net income for 2018.
a. 3,420,000 b. 4,860,000 c. 4,500,000 d. 5,580,000
2. Fanasan Manufacturing produced 10,000 kitchen clocks in 2018 for P50 each and sold them to Ivan Corp. at P150 each. Ivan resold 8,000 units at
P220 each in 2018 and held the remaining units in inventory on December 31, 2018. Ivan owns 70 percent of the stock of Fanasan Manufacturing.
How much gross profit must be included in the consolidated income statement for 2018?
a. 1,360,000 b. 952,000 c. 560,000 d. 1,000,000
3.
Irene Inc. acquired a 60% interest in Hannah Co. several years ago. During 2017, Hannah sold inventory costing P75,000 to Irene for P100,000. A
total of 16 percent of this inventory was not sold to outsider until 2018. During 2018, Hannah sold inventory costing P96,000 to Irene for
P120,000. A total of 35 percent of this inventory was not sold to outsid,ers until 2019. In 2018, Irene reported costs of sales of P380,000 while
Hannah reported P210,000. What is the consolidated cost of sales?
a. 594,400 b. 473,440 c. 474400 d. 522,400

4. Rocsin Company holds 90 percent of the common stock of Sathelin Company. In 2018, Rocsin reports sales of P800,000 and cost of sales of
P600,000. For this same period, Sathelin has sales of P300,000 and cost of sales of P180,000. During 2018, Rocsin sold merchandise to Sathelin for
P100,000. The subsidiary still possesses 40 percent of this inventory at the end of 2018. Rocsin had established the transfer price based on its
normal markup. What are the consolidated sales and cost of sales?
a. 1,000,000; 690,000 b. 1,000,000; 705,000 c. 1,000,000; 740,000 d. 970,000; 696,000

5. Use the same information as in problem No. 5 except that the transfer was from Sathelin to Rocsin Company. What are the consolidated sales and
cost of goods sold for 2018?
a. 1,000,000; 720,000 b. 1,000,000; 755,000 c. 1,000,000; 696,000 d. 970,000; 712,000

6. Lydia, Inc., holds 90 percent interest in Judy Ann Co. During 2017, Judy Ann sold inventory costing P77,000 to Lydia for P110,000. A total of
P40,000 of this inventory was not sold to outsiders until 2018. During 2018, Judy Ann sold inventory costing P72,000 to Lydia for P120,000. A total
of P50,000 of this inventory was not sold to outsiders until 2020. In 2018, Lydia reported net income of P150,000 while Judy Ann reported
P90,000. Determine the minority interest income (MINI) for 2018?
a. 8,000 b. 8,200 c. 9,000 d. 9,800

Jaco Corporation recorded P65,000 investment income from Krizel Corporation, its 80% owned subsidiary, for the year 2017, and P70,000 for the year
2018. This investment income represented 80% of Krizel’s reported income of P81,250 and P87,500 in 2017 and 2018, respectively. Jaco’s net income
(including investment income) for 2017 was P240,000 and for 2018 it was P160,000. During 2017 Krizel sold merchandise to Jaco for P180,000. This
merchandise cost Krizel P130,000, and 40% of it was inventoried by Jaco at December 31, 2017. Krizel sold merchandise that cost P150,000 to Jaco for
P210,000 during 2018. The December 31, 2018 inventory of Jaco included P63,000 of this merchandise.
7. The consolidated net income under parent company approach for 2017 must be:
a. 240,000 b. 220,000 c. 289,000 d. 224,000

8. The consolidated net income under parent company approach for 2018 must be:
a. 161,600 b. 231,600 c. 162,000 d. 160,000

9. S Corp. is a 90% owned subsidiary of P Corp. acquired several years ago at book value equal fair value. For these years 2018 and 2019, P and S
report the following:

2018 2019
P’s Separate income P300,000 P400,000
S’s Net Income 80,000 60,000
The only intercompany transactions between P and S during 2018 and 2019 was the January 1, 2018 sale of land. The land had a book value of
P20,000 and was sold intercompany for P30,000, its appraised value at the time of sale.
If the land was sold by P to S (downstream) and that S still owns the land at December 31, 2019, compute for the Consolidated Net income under
Entity Approach for 2018 and 2019:

a. 363,000; 454,000 b. 362,000; 454,000 c. 370,000; 460,000 d. 362,000; 460,000

10. Using the same information in No. 15, except that the land was sold by S to P and P still owns the land at December 31, 2019, compute the
Consolidated Net Income Under Parent Approach for 2017 and 2018:
a. 363,000; 454,000
b. 362,000; 454,000
c. 370,000; 460,000
d. 363,000; 460,000
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