CONSOLIDATION SUBSEQUENT TO THE DATE OF ACQUISITION

PROBLEM 1
On January 1, 2022, Pink Panther acquired 70% of the outstanding shares of stocks of
Pink Sweats for P1,500,000. The book value of the net assets of Pink Panther at the date
of acquisition was P3,000,000 of which the retained earnings amounted to P1,800,000.
On the other hand, the book value of the net assets of Pink Sweats at the date of
acquisition was P2,800,000. The non-controlling interest is measured at the minimum.

The book value of the assets and liabilities of Pink Sweats equal the fair values except:
an inventory which had an excess of fair over book value in the amount of P60,000; an
equipment which had an excess of book over fair value in the amount of P80,000; and a
note payable bearing an interest of 5% which was understated by P10,000.

30% of the above inventory was sold in the current year and the rest was sold in 2023.
The equipment had a remaining life of 2 years. The note payable was issued on January
1, 2020 and it had a remaining term of 5 years. The following data were also ascertained:

2022 2023
Net income P. Panther P500,000 P600,000
Net income P. Sweats P320,000 P280,000
Dividend declared P. P110,000 P150,000
Panther
Dividend declared P. P70,000 P60,000
Sweats

1. What is the consolidated net income attributable to Pink Panther on December 31,
2022?
A. 1,143,050
B. 1,098,250
C. 1,129,050
D. 1,092,500
E. 1,095,250

2. What is the non-controlling interest net income on December 31, 2022?

A. 96,000
B. 102,450
C. 89,550
D. 102,750
E. 89,750

3. What is the non-controlling interest net asset on December 31, 2022?

A. 918,450
B. 912,450
C. 933,450
D. 912,750
E. 920,450

4. What is the consolidated retained earnings on December 31, 2022?

A. 2,819,050
B. 2,833,050
C. 2,782,500
D. 2,788,250
E. 2,785,500

5. What is the non-controlling interest net asset on December 31, 2023?

A. 983,700
B. 978,450
C. 979,200
D. 977,700
E. 967,450
 6. What is the consolidated retained earnings on December 31, 2023?
A. 3,421,300
B. 3,860,300
C. 3,424,800
D. 3,463,300
E. 3,555,300

PROBLEM 2

On January 1, 2022, Human Alarm Co acquired 60% of the outstanding shares of stocks
of Sleeper BB Co for P3,000,000. The book value of the net assets of Human Alarm Co
at the date of acquisition consisted of Ordinary shares in the amount of P1,000,000;
Additional paid in capital in the amount of P2,500,000; retained earnings in the amount of
P2,400,000. On the other hand, the book value of the net assets of Sleeper BB Co at the
date of acquisition was P2,200,000 including a goodwill in the amount of P250,000. The
non-controlling interest is measured at fair value in the amount of P1,300,000.

The book value of the assets and liabilities of Sleeper BB Co equal the fair values except:
an inventory which was overstated in the amount of P45,000 and a machine which was
understated by P200,000.

The machine had a remaining life of 8 years. If the result of the business combination was
goodwill, it was impaired in the amount of P75,000 in the current year. The net income of
Human Alarm Co was P700,000 and the net income of Sleeper BB Co was P430,000 at
the end of the year. Dividends declared by Human Alarm Co was P220,000, but only
P200,000 was paid. On the other hand, dividends declared by Sleeper BB Co was
P130,000, but only P100,000 was paid.

1. What is the consolidated net income attributable to Human Alarm Co on December

31, 2022?
A. 832,649
B. 808,649
C. 847,000
D. 910,649
E. 850,449

2. What is the non-controlling interest net income on December 31, 2022?

A. 150,000
B. 148,351
C. 164,351
D. 134,000
E. 154,351

3. What is the non-controlling interest net asset on December 31, 2022?

A. 1,398,000
B. 1,464,351
C. 1,395,351
D. 1,412,351
E. 1,495,351

4. What is the consolidated retained earnings on December 31, 2022?

A. 3,027,000
B. 3,012,649
C. 3,032,649
D. 2,988,649
E. 3,089,649