Worksheet for Consolidated Financial Statements

Cost Model (Partial Goodwill)

December 31, 2020
Income Statement Parent Subsidiary
Sales 1,800,000 930,000
Dividend income 116,160
Total revenue 1,916,160 930,000
Cost of Goods sold 1,100,000 300,000
Depreciation Expense -
Amortization Expense
Operating Expenses ( OPEX) 280,000 160,000
Goodwill Impairment Loss
Total Cost and Expenses 1,380,000 460,000
Net income 536,160 470,000
NCI in Net Income-Subsidiary
Net income to Retained Earnings 536,160 470,000

Statament of Retained Earnings

Retained Earnings, 1/1
Parent Co. 198,250
Subsidiary 14,000
Net Income, from above 536,160 470,000
Total 734,410 484,000
Dividends Paid
Parent Co. 220323
Subsidiary 145,200
Retained Earnings, 12/31 to Balance Sheet 514,087 338,800
Accumulated depreciation-Delivery eqpt. 245,000 22,917
Accumulated amortization 700
Accounts Payable 57,050 40,000
Bonds Payable 109,700
Common Stock 147,000
Common Stock 50,000
Additional Paid In Capital 138,000
Additional Paid In Capital 46,000
Retained Earnings 514,087 338,800
Non-controlling Interest

TOTAL 1,210,837 498,417

inancial Statements
Goodwill)
2020
DR. CR. Consolidated
Jan-01

January 01-Dec. 31

Dec. 31

- - 0
 First Year After Acquisitio
PARENT

Investment in subsidiary 150,000

Common stock 27,000
APIC 123,000

Cash 116,160
Dividend Income 116,160

Cash 1,260,000
Accounts Reivable 540,000

Sales 1,800,000

COGS 1,100,000
Cash 1,100,000

OPEX 280,000
Accum. Depn.-store eqpt 14,583
Accum. Depn.-Del. eqpt 25000
Cash 240,417

DIVIDENDS PAID 220,323

CASH 220,323
ar After Acquisition
SUBSIDAIRY
Jan-01 SUBSIDIARY CI PARENT
NCI

January 01-Dec. 31
Dividends paid 145,200
cash 145,200

Dec. 31
Cash 651,000
Accounts Receivable 279,000
Sales 930,000

COGS 300,000
Cash 300,000

OPEX 160,000
Accum. Depn.-store eqpt
Accum. Depn.-Del. eqpt
Accum. Amorrtization
Cash
 3,500
2,917
700
152,883
 Ra m o n Ma g sa ysa y Me mo ria l Co lle g e s
Ba c he lo r o f Sc ie nc e in Ac c o unta nc y Pro g ra m
Pio ne e r Ave ., Ge ne ra l Sa nto s City
Te l. No . 552-3348

Na m e : ______________________________ Da te : ___________ Sc o re : _____________

Su b je c t : AC C TG 37 MIDTERM – EXERC ISES REMO VAL – WO RKING PAPER PREPARATIO N
In stru c to r: Mrs. Ma rivic B. Pe ñ a flo r, C PA,MBA AY: 2020-2021

Ge ne ra l Instruc tio n: Write the le tte r o f yo ur c ho ic e o n the a nswe r she e t p ro vide d o n the la st pa g e .

O n Ju n e 1, 2020, Pa re n t C o m p a n y a c q u ire d 80% o f Su b sid ia ry C o m p a n y in e xc h a n g e fo r 5, 400 sh a re s o f P5 p a r c o m m o n sto c

h a vin g a m a rke t va lu e o f P15 0, 000. Pa re n t a n d Su b sid ia ry c o nd e n se d b a la n c e sh e e ts w e re a s fo llo w s:
Pa re n t C o m p a n y a nd Su b sid ia ry C o m p a n y
Ba la n c e Sh e e ts a t Ja n u a ry 1, 2020
(b e fo re c o m b in a tio n )

Pa re n t Su b sid ia ry
C om p a ny C om p a ny
Asse ts
C a sh P 229,250 P 84, 800
Ac c o u n ts re c e iva b le (n e t) 67,850 4, 100
In ve n to rie s 22, 900 10, 100
Sto re Eq u ip m e n t - 10 yrs 250, 000 60, 000
Ac c u m u la te d De p re c ia tio n - Sto re e q p t. 150,000 36,000
De live ry Eq u ip m e n t - 7 yrs 300,000 35,000
Ac c u m u la te d De p re c ia tio n – De l e q p t. 220,000 20,000
Pa te n ts ______- 12, 000
To ta l a sse ts P 500,000 P150,000
Lia b ilitie s a nd sto c kh o ld e rs’ e q u ity
Ac c o u n ts p a ya b le P 57, 050 P 40, 000
Bo nd s p a ya b le , 15% 109, 700 -
C o m m o n sto c k, P5 p a r 120, 000 50, 000
Ad d itio n a l p a id -in c a p ita l 15, 000 46, 000
Re ta in e d e a rn in g s 198, 250 14, 000
To ta l lia b ilitie s a n d Sto c kh o ld e rs’ e q uity P500,000 P 150,000
At th e d a te o f a c q u isitio n , a ll a sse ts a n d lia b ilitie s o f Su b sid ia ry C o m p a n y h a ve b o o k va lu e a p p ro xim a te ly e q u a l to th e ir re s p e c tiv
m a rke t va lu e s e xc e p t th e fo llo w in g a s d e te rm in e d b y a p p ra isa l a s fo llo ws:

Inve n to rie s (FIFO m e th o d ) P16, 100

Sto re Eq u ip m e n t 18, 000
De live ry Eq u ip m e n t 14,000
Pa te n ts (re m a inin g life 10 ye a rs) 16, 000
G o o d w ill im p a irm e n t 10% p e r ye a r
C o m p a ra tive se p a ra te c o m p a n y in c o m e sta te m e n ts fo r th e se a ffilia te d c o rp o ra tio n s fo r 2011 a n d 2012 a re a s fo llo w s:
2020 2021

Pa re n t Sub sid ia ry Pa re nt Su b sid ia ry

C o rp o ra tio n C o rp o ra tio n C o rp o ra tio n C o rp o ra tio n
Sa le s P1, 800, 000 P 930, 000 P2, 900, 000 P 1, 600, 00
In ve stm e n t in c o m e -

In c o m e c re d its
C o st o f sa le s P1, 100, 000 P 300, 000 P1, 200, 000 P 550, 00
O p e ra tin g e xp e n se s 280, 000 160, 000 420, 000 310, 00
Ne t inc o m e ? ? ?

The pa re nt a nd subsidia ry we re de c la re d a nd pa id d ivide nds a t 30% o f Re ta ine d e a rning s a nnua lly.

 In ve stm e n t in c o m e -

In c o m e c re d its
C o st o f sa le s P1, 100, 000 P 300, 000 P1, 200, 000 P 550, 00
O p e ra tin g e xp e n se s 280, 000 160, 000 420, 000 310, 00
Ne t inc o m e ? ? ?

The pa re nt a nd subsidia ry we re de c la re d a nd pa id d ivide nds a t 30% o f Re ta ine d e a rning s a nnua lly.

Assum e : 30% o f p a re nt a nd subsidia ry sa le s we re o n a c c o unt.

Pre p a re w o rkin g p a p e r fo r ye a r 1 a n d 2 a ssu m in g p a rtia l g o o d w ill m e th o d is u se d .

 PAPER PREPARATIO N

a re s o f P5 p a r c o m m o n sto c k
w s:

sid ia ry
m p a ny

84, 800
4, 100
10, 100
60, 000
36,000
35,000
20,000
12, 000
P150,000

40, 000
-
50, 000
46, 000
14, 000
P 150,000
a te ly e q u a l to th e ir re s p e c tive

012 a re a s fo llo w s:
2021

Pa re n t Su b sid ia ry
rp o ra tio n C o rp o ra tio n
P2, 900, 000 P 1, 600, 000

P1, 200, 000 P 550, 000

420, 000 310, 000
? ?
P1, 200, 000 P 550, 000
420, 000 310, 000
? ?