11. On May 2, 2020, the separate statement of financial position of Peter Corporation and Simon Company are as follows: Simon P15,500 35,800 10,200 78.000 P139,500 Peter Cash Accounts receivable Inventories Plant assets Total assets P145,700 120,500 42,500 185,800 P494.500 ai P 28,800 50,000 Liabilities Capital stock, Pl100 par value Additional paid in capital Retained earnings Total liabilities and stockholders' equity P110,400 200,000 50,000 134.100 P494,500 60,700 P139,500 On May 2, 2020 Peter acquired 90% of Simon's outstanding voting shares for P108,000. Peter incurred additional P32,000 in acquisition-related costs. All the assets of Simon are fairly valued except the plant assets with a fair value of P90,000 on May 2, 2020. NCI is measured at proportionate share of Simon's identifiable net assets. What amount of total assets will be reported in the consolidated statement of financial position immediately after acquisition? a. P538,000 b. P494,000 c. P646,000 d. P506,000 12. What amount of total equity will be reported in the consolidated statement of financial position immediately after acquisition? а. Р366,800 b. P352,100 c. P398,800 а. Р396,370
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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