16) Rainbow Co. owns the following investment in other companies. Green Co. Red Co. Blue Co Select one Oa Green Co. O b. Red Co. Rainbow Co. also has appointed five of the seven directors of Blue Co. Which of the following investments are accounted for as subsidiaries in the consolidated accounts of R Co. c Green and Blue Equity shares held 80% 25% 45% Od. All of them Non-equity shares held nil 80% 25%
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- ardner Corp. owns 80% of the voting common stock of Lockhart Co. Lockhart owns 70% of Canning Co. Gardner and Lockhart both use the initial value method to account for their investments. The following information is available from the financial statements and records of the three companies: GardnerCorp. LockhartCo. CanningCo. Separate company net income before investment income $900,000 $650,000 $150,000 Dividend income from investment in subsidiary 250,000 120,000 Deferral of intra-entity gains 110,000 80,000 20,000 Amortization expense related to excess fair value over book value of investment 40,000 25,000 Separate company net income includes intra-entity gains before the consolidating deferral but does not include dividend income from investment in subsidiary. The accrual-based net income of Gardner Corp. is calculated to be4. Assume that the entity is a medium-size and the company policy is to account this type of investment at fair market value, how much investment income should be reported by Jessa Company for 2021? Chevy Company owns 50% of another entity’s preference share capital and 40% of its ordinary share capital. The investee’s share capital outstanding at December 31, 2021 include P5,000,000 of 10% cumulative preference share capital and P10,000,000 of ordinary share capital. The investee reported net income of P6,000,000 for 2021. No dividend was declared for both preference and ordinary share in 2021ABC Inc. holds 17% of the common shares of XYZ Ltd. ABC is able to appoint three members of XYZ’s 12-member Board of Directors. ABC is also a supplier of raw materials to XYZ. XYZ is a private company and the remaining 83% of XYZ’s common shares are widely held. Assume that ABC reports under ASPE, what are the reporting options for its investment in XYZ? A. Equity method B. Equity method or costC. Equity method, cost, or consolidation D. Fair value through profit or loss (FVTPL) or cost.
- Wixi Co. has the following equity investments in FSN, DELL, and ATI. (1) Which of these companies are subsidiaries of Wixi? (2) How are individual assets and liabilities of a parent and its subsidiary(ies) reported on a balance sheet? FSN stock: Wixi owns 70% of the voting common stock and has controlling influence. DELL stock: Wixi owns 5% of the voting common stock and has insignificant influence. ATI stock: Wixi owns 30% of the voting common stock and has significant influence.On January 1, 20x1, AAA Co. acquired 30% ownership interest in BBB, Inc. for ₱200,000. Because the investment gave AAA significant influence over BBB, the investment was accounted for under the equity method in accordance with PAS 28.From 20x1 to the end of 20x3, AAA recognized ₱100,000 net share in the profits of the associate and ₱20,000 share in dividends. Therefore, the carrying amount of the investment in associate account on January 1, 20x3, is ₱280,000.On January 1, 20x4, AAA acquired additional 60% ownership interest BBB, Inc. for ₱1,600,000. As of this date, AAA has identified the following:a. The previously held 30% interest has a fair value of ₱360,000.b. BBB’s net identifiable assets have a fair value of ₱2,000,000.c. AAA elected to measure non-controlling interests at the non-controlling interest’s proportionate share of BBB’s identifiable net assets.Requirement: Compute for the goodwill.Determine the following asset balances that would appear in the consolidated financial statements of Portland and its 80% owned subsidiary:1) Current Assets2) Land3) Building and Equipment4) Goodwill5) Investment in Sidney Corporation6) Ordinary shares7) Retained earnings8) Minority interest9) Goodwill and minority interest assuming that Sydney’s shares are traded in the stock marketat P 20/share.
- Determine the following asset balances that would appear in the consolidated financial statements of Portland and its 80% owned subsidiary: Investment in Sidney Corporation Ordinary shares Retained earnings Minority interest Goodwill and minority interest assuming that Sydney’s shares are traded in the stock marketat P 20/share.In the following situation, discuss which entity, if any, may be a parent required to prepare consolidated financial statements under AASB 10/IFRS 10. Runner Ltd owns 80% of the shares of Beep Beep Ltd, which owns 100% of the shares of Looney Ltd. All companies prepare their own financial reports under AASB/IFRS accounting standards. Although the shares of Beep Beep Ltd are not traded on any public stock exchange, its debt instruments are publicly traded.Eduardo, a large entity, owns 50% and 20% of Letecia Corporation’s ordinary and preference shares, respectively. Letecia’s shares outstanding at December 31, 2021 follow: Ordinary share, P5,000,000 10% non-cumulative preference share, P1,200,000 Letecia reported net income of P750,000 for the year ended December 31, 2021. What amount should Eduardo report as total revenue related to its investment in Letecia Company for the year ended December 31, 2021?
- In which of the following situations should the provision of PFRS 3 be applied? ABC Insurance acquiring four wholly-owned subsidiaries. ABC Inc. has 50% equity interest in DEF Ltd. ABC Ltd. has an interest of 20% in equity shares of Entity D. ABC and DEF Bank has a holding of 50% each in the equity of GHI Pharmaceuticals, Ltd.3. In which of the following situations should the consolidated financial statements be presented?Group of answer choices a. INH Insurance is a parent of group of four wholly-owned subsidiaries. b. AFG Ltd. has an interest of 20% in equity shares of Entity D. c. PQR and HJK Bank has a holding of 50% each in the equity of XYZ Pharmaceuticals, Ltd. d. ABC Inc. has 5% equity interest in PKJ, LtdPrior to being united in a business combination, Atkins, Inc., and Waterson Corporation had the following stockholders’ equity figures: Atkins Waterson Common stock ($1 par value) $ 210,000 $ 56,000 Additional paid-in capital 105,000 25,500 Retained earnings 389,000 140,000 Atkins issues 67,750 new shares of its common stock valued at $3 per share for all of the outstanding stock of Waterson. Immediately afterward, what are consolidated Additional Paid-In Capital and Retained Earnings, respectively? Multiple Choice $232,500 and $529,000. $124,500 and $389,000. $130,500 and $529,000. $240,500 and $389,000.