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Ordinary shares
Retained earnings
Phillips
Corporation
P1,050,000
1,560,000
Signage
Company
P 240,000
420,000
On December 31, 2013, Signage Company reported net income of P105,000 and
paid dividends of P36,000 to Philips. Philips reported from its separate operations of
P285,000 and paid dividends of P138,000. Goodwill had been impaired and should
be reported at P6,000 on December 31, 2013.
1. What is the non-controlling interest in profit of Signage Company on December
31, 2013?
A. P21,000
B. P13,800
C. P18,750
D. P18,600
2. What is the consolidated profit attributable to parent shareholders on December
31, 2013?
A. P340,200
B. P360,000
C. P336,000
D. P356,400
3. What is the consolidated retained earnings attributable to parents shareholders
equity on December 31, 2013?
A. P1,757,400
B. P2,079,750
C. P1,762,200
D. P1,758,000
4. What amount of non-controlling interest is to be presented in the consolidated
statement of financial position on December 31, 2013?
A. P164,250
B. P145,500
C. P166,800
D. P154,500
PROBLEM 2.
On January 2, 2012, D Corporation purchased 80% of the outstanding shares of C
Company for P4,750,000. At that date, C had P4,000,000 of ordinary shares
outstanding and retained earnings of P1,600,000.
Cs equipment with a remaining life of 5 years had a book value of P2,250,000
and a fair value of P2,630,000. Cs remaining assets had book values equal to
their fair values.
All intangibles except goodwill are expected to have remaining lives of 8 years.
The income and dividend figures for both D and C are as follows: Net income of
D in 2012 is P900,000; 2013 is P1,100,000. Net income of C in 2012 is P340,000;
2013 is P510,000.
Dividends of D in 2012 is P220,000; 2013 is P390,000. Dividends of C in 2012 is
P70,000; 2013 is P130,000.
Ds retained earnings balance at the date of acquisition was P3,450,000.
1. How much is the consolidated retained earnings attributable to controlling
interest in 2013?
BUSINESS COMBINATION SUBSEQUENT TO ACQUISITION &
INTERCOMPANY TRANSACTIONS #0013
P5,272,400
P5,333,200
P5,238,400
P5,232,400
PROBLEM 4.
Pure Corporation acquired an 80% interest in Sincere Company on January 2, 2012
for P2,520,000. On this date, the share capital and retained earnings of the two
companies follow:
Share Capital
Retained earnings
Sincere Co.
P2,250,000
450,000
On January 2, 2012, the assets and liabilities of Sincere Co. were stated at their fair
values except for machinery which is undervalued by P225,000 (remaining life is 3
years). On September 30, 2012, Sincere sold merchandise to Pure at an intercompany profit of P150,000; 25% was still unsold at year-end. Likewise, on October
1, 2013, Sincere purchased merchandise from Pure for P3,600,000. The selling
affiliate included a 20% mark-up on cost on this sale. Only 75% of these purchases
had been sold to unrelated parties as of December 31, 2013. As of December 31,
2013, goodwill was determined to be impaired by P60,000.
The following is the summary of the 2013 transactions of the affiliated companies:
Pure Corp.
P1,500,000
600,000
Net Income
Dividends declared and paid
Sincere Co.
P600,000
180,000
On October 1, 2012, Solar Inc. purchased a piece of land costing P1,000,000 from
Power Company for P1,500,000. On December 1, 2013, Solar Inc. sold this land to
unrelated party for P1,500,000. On the other hand, on July 1, 2013, Solar Inc. sold a
used photo-copier with a carrying value of P60,000 and remaining life of 3 years to
Power Company for P42,000.
Separate Statement of Comprehensive income for the two companies for the year
2013 follow:
Sales
Cost of sales
Gross Profit
Operating expenses
Power Company
P25,000,000
(15,000,000)
P10,000,000
(6,000,000)
Solar Inc.
P14,000,000
(8,400,000)
P5,600,00
(3,800,000)
P4,000,000
P4,000,000
P1,800,000
(18,000)
40,000
P1,822,000