ACCTG 029 – ACCOUNTING FOR BUSINESS COMBINATION

CONSOLIDATION – SUBSEQUENT TO DATE OF ACQUISITION

FINAL QUIZ 1

On May 1, 2021, TIP Inc. purchased 80% of the ordinary shares of PIT Company for ₱50,000. Additional data
concerning these two companies for years 2021 and 2022:

2021 2022
TIP Inc. PIT Co. TIP Inc. PIT Co.
Ordinary shares ₱ 100,000 ₱ 25,000 ₱ 100,000 ₱ 25,000
Other contributed capital 40,000 10,000 40,000 10,000
Retained earnings, 1/1 80,000 10,000 129,000 53,000
Net income (loss) 64,000 45,000 37,500 (5,000)
Cash dividends (11/30) 15,000 2,000 5,000 -0-

Any difference between book value and the value implied by the purchase price relates to PIT Company’s land. TIP
Inc. uses the cost method to record its investment.

Required:
1. Calculate the controlling interest in consolidated net income for 2021. (3 points)
2. Calculate the controlling interest in consolidated net income for 2022. (3 points)
3. Calculate the controlling interest in consolidated retained earnings for 2021. (2 points)
4. Calculate the controlling interest in consolidated retained earnings for 2022. (2 points)