1. ABC Ent, purchases 90% of the outstanding voting shares of DEF Corp on January 1, 2021. On that date, A. ABC’s Non-controlling interest account will include 10% of the book value of DEF’s net assetsB. ABC’s Non-controlling interest account will include 10% of the fair value of DEF’s net asset.C. ABC’s Non-controlling interest acocunt will include 10% of any unallocated portion of the acquisition differential on the Date of Acquisition.D. ABC’s Non-controlling interest account will include 10% of the acquisition differential on the Date of Acquisition. 2.On January 2, 2021. PABC corporation acquired 75% of the outstanding ordinary shares of SDEF Company for P513,000 cash, excluding direct acquisition costs. The investment was accounted for by the cost method. On January 2, 2021, SDEF’s identifiable net assets (book value and fair value) were P570,000. SDEF’s net income for the year ended December 31, 2021 was P304,000. During 2021, PABC received P21,600 cash dividends from SDEF. There were no other inter-company transactions. The balance of the Non-controlling interest in Net assets of subsidiary account on December 31, 2021 is A. 218,300B. 211,300C. 76,000D. 218,500 3.In a share acquisition business combination resulting in a parent- subsidiary relationship, the difference between the current fair values and book values of the subsidiary’s identifiable net assets on acquisition date are: A. Entered in the accounting records of the subsidiaryB. Provided in a consolidated statement worksheet elimination.C. Account for in appropriately titled ledger accounts in the parent company’s accounting recordsD. Disregarded 3.The existence of overvalued assets (when comparing book and market value) on the books of the entity acquired in an acquisition method business combination: A. Increase the excess of cost over book value applicable to unrecorded goodwill.B. Has the same effect as overvalued liabilities on the excess of cost over book value applicable to unrecorded goodwillC. Decrease the excess of cost over book value applicable to unrecorded goodwill.D. Means that there will never be goodwill recorded in the business combination. 4. The home office ships merchandise to the branch at 25 percent above cost. If the balance before closing in the Intracompany Inventory Profit account is 66,000 and Shipments from Home Office amounted to 300,000, what was the cost of the branch's beginning inventory? A. P30,000B. P24,000C. P96,000D. P80,000 5.At the date of purchase, business combination resulting in a parent-subsidiary relationship, the difference between current fair values and carrying amounts of the subsidiary’s net asset is: A. Accounted for in some other manner.B. Reflected in a consolidation eliminationC. Recorded in the applicable asset and liability accounts of the parent companyD. Recorded in the applicable asset and liability accounts of the subsidiary 6.PABC acquired 65% of SDEF’s voting ordinary shares for P468,000, P108,000 above the net assets of SDE’s book value on January 2, 2021. The difference attributable to an equipment which is amortized over 10 years. What is the effect of the purchase difference on the 2023 net income attributable to owners of the parent? A.(16,615)B. 21,600C. (32,400)D. (10,800) 7.The “excess of the acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities, and contingent liabilities over cost” (formerly known as negative goodwill) should be A. Amortized over the life of the assets acquired.B. Reassessed as to the accuracy of its measurement and then recognized in retained earnings.C.Reassessed as to the accuracy of its measurement and then recognized immediately in profit or loss.D.Carried as a capital reserve indefinitely.

Question

1. ABC Ent, purchases 90% of the outstanding voting shares of DEF Corp on January 1, 2021. On that date, A. ABC’s Non-controlling interest account will include 10% of the book value of DEF’s net assetsB. ABC’s Non-controlling interest account will include 10% of the fair value of DEF’s net asset.C. ABC’s Non-controlling interest acocunt will include 10% of any unallocated portion of the acquisition differential on the Date of Acquisition.D. ABC’s Non-controlling interest account will include 10% of the acquisition differential on the Date of Acquisition. 2.On January 2, 2021. PABC corporation acquired 75% of the outstanding ordinary shares of SDEF Company for P513,000 cash, excluding direct acquisition costs. The investment was accounted for by the cost method. On January 2, 2021, SDEF’s identifiable net assets (book value and fair value) were P570,000. SDEF’s net income for the year ended December 31, 2021 was P304,000. During 2021, PABC received P21,600 cash dividends from SDEF. There were no other inter-company transactions. The balance of the Non-controlling interest in Net assets of subsidiary account on December 31, 2021 is A. 218,300B. 211,300C. 76,000D. 218,500 3.In a share acquisition business combination resulting in a parent- subsidiary relationship, the difference between the current fair values and book values of the subsidiary’s identifiable net assets on acquisition date are: A. Entered in the accounting records of the subsidiaryB. Provided in a consolidated statement worksheet elimination.C. Account for in appropriately titled ledger accounts in the parent company’s accounting recordsD. Disregarded 3.The existence of overvalued assets (when comparing book and market value) on the books of the entity acquired in an acquisition method business combination: A. Increase the excess of cost over book value applicable to unrecorded goodwill.B. Has the same effect as overvalued liabilities on the excess of cost over book value applicable to unrecorded goodwillC. Decrease the excess of cost over book value applicable to unrecorded goodwill.D. Means that there will never be goodwill recorded in the business combination. 4. The home office ships merchandise to the branch at 25 percent above cost. If the balance before closing in the Intracompany Inventory Profit account is 66,000 and Shipments from Home Office amounted to 300,000, what was the cost of the branch's beginning inventory? A. P30,000B. P24,000C. P96,000D. P80,000 5.At the date of purchase, business combination resulting in a parent-subsidiary relationship, the difference between current fair values and carrying amounts of the subsidiary’s net asset is: A. Accounted for in some other manner.B. Reflected in a consolidation eliminationC. Recorded in the applicable asset and liability accounts of the parent companyD. Recorded in the applicable asset and liability accounts of the subsidiary 6.PABC acquired 65% of SDEF’s voting ordinary shares for P468,000, P108,000 above the net assets of SDE’s book value on January 2, 2021. The difference attributable to an equipment which is amortized over 10 years. What is the effect of the purchase difference on the 2023 net income attributable to owners of the parent? A.(16,615)B. 21,600C. (32,400)D. (10,800) 7.The “excess of the acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities, and contingent liabilities over cost” (formerly known as negative goodwill) should be A. Amortized over the life of the assets acquired.B. Reassessed as to the accuracy of its measurement and then recognized in retained earnings.C.Reassessed as to the accuracy of its measurement and then recognized immediately in profit or loss.D.Carried as a capital reserve indefinitely.

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