CHAPTER 3: CONSO0LIDATION- SUBS EQUENT TO DATE OF ACQUISITION Page | 126 17. Galaxy Corporation acquired 80% of the outstanding shares of United Company on June 1, 2020 for P3,517,500. United Company's stockholder's equity components at the end of this year are as follows; Ordinary shares, P100 par, P1,500,000. Share premium P675,000 and Retained Eamings P1,335,000. Non-controlling interest is measured at fair value and the fair value is P705,000. The assets of United were fairly valued, except for inventories, which are overstated by P66,000 and equipment, which was understated by P90,000. Remaining useful life of equipment is 4 years Stockholder's equity of Galaxy on January 1, 2020 is composed of Ordinary shares P4,500,000, Share premium P1,050,000, Retained Earnings P3,150,000. Goodwill, if any, should be written down by P85,350 at year-end. Net Income for the first year of parent is P450,000 and the net income of subsidiary from the date of acquisition is P255,000. Dividends declared at the end of the year amounted to P120,000 and P90,000. During the year, there was no issuance of new ordinary shares. How much is the non-controlling interest in net assets on December 31, 2020? a. P763,455 b. P871,005 c. P731,505 d. P745,455 18. What is the amount of consolidated shareholder's equity? a. P9,853,575 b. P9,122,070 c. P8,773,575 d. P9,867,525 19. On January 5, 2020, Purpose Corporation purchased 70% of Showtime Company's P10 par ordinary shares for P900,000. On this date, the carrying amount of Showtime's net assets was P1,000,000. The fair value of identifiable net assets and liabilities of Showtime were the same as the carrying amount except for equipment, which is P200,000 in excess alda of carrying amount. For the year ended December 31, 2020, Showtime had a net income of P150,000 and paid cash dividend of P63,000 to Purpose. Excess attributable to equipment is amortized over 10 years. In December 31, 2020 consolidated statements, the non-controlling interest should be reported at: а. Р397,714 b. P380,614 c. P372,000 d. P345,500
CHAPTER 3: CONSO0LIDATION- SUBS EQUENT TO DATE OF ACQUISITION Page | 126 17. Galaxy Corporation acquired 80% of the outstanding shares of United Company on June 1, 2020 for P3,517,500. United Company's stockholder's equity components at the end of this year are as follows; Ordinary shares, P100 par, P1,500,000. Share premium P675,000 and Retained Eamings P1,335,000. Non-controlling interest is measured at fair value and the fair value is P705,000. The assets of United were fairly valued, except for inventories, which are overstated by P66,000 and equipment, which was understated by P90,000. Remaining useful life of equipment is 4 years Stockholder's equity of Galaxy on January 1, 2020 is composed of Ordinary shares P4,500,000, Share premium P1,050,000, Retained Earnings P3,150,000. Goodwill, if any, should be written down by P85,350 at year-end. Net Income for the first year of parent is P450,000 and the net income of subsidiary from the date of acquisition is P255,000. Dividends declared at the end of the year amounted to P120,000 and P90,000. During the year, there was no issuance of new ordinary shares. How much is the non-controlling interest in net assets on December 31, 2020? a. P763,455 b. P871,005 c. P731,505 d. P745,455 18. What is the amount of consolidated shareholder's equity? a. P9,853,575 b. P9,122,070 c. P8,773,575 d. P9,867,525 19. On January 5, 2020, Purpose Corporation purchased 70% of Showtime Company's P10 par ordinary shares for P900,000. On this date, the carrying amount of Showtime's net assets was P1,000,000. The fair value of identifiable net assets and liabilities of Showtime were the same as the carrying amount except for equipment, which is P200,000 in excess alda of carrying amount. For the year ended December 31, 2020, Showtime had a net income of P150,000 and paid cash dividend of P63,000 to Purpose. Excess attributable to equipment is amortized over 10 years. In December 31, 2020 consolidated statements, the non-controlling interest should be reported at: а. Р397,714 b. P380,614 c. P372,000 d. P345,500
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 23E
Related questions
Question
17, 18, 19
solution and explanation please
Transcribed Image Text:CHAPTER 3: CONSO0LIDATION- SUBS EQUENT TO
DATE OF ACQUISITION
Page | 126
17. Galaxy Corporation acquired 80% of the outstanding shares of United Company on June
1, 2020 for P3,517,500. United Company's stockholder's equity components at the end of
this year are as follows; Ordinary shares, P100 par, P1,500,000. Share premium P675,000
and Retained Eamings P1,335,000. Non-controlling interest is measured at fair value and
the fair value is P705,000. The assets of United were fairly valued, except for inventories,
which are overstated by P66,000 and equipment, which was understated by P90,000.
Remaining useful life of equipment is 4 years Stockholder's equity of Galaxy on January
1, 2020 is composed of Ordinary shares P4,500,000, Share premium P1,050,000, Retained
Earnings P3,150,000. Goodwill, if any, should be written down by P85,350 at year-end.
Net Income for the first year of parent is P450,000 and the net income of subsidiary from
the date of acquisition is P255,000. Dividends declared at the end of the year amounted to
P120,000 and P90,000. During the year, there was no issuance of new ordinary shares.
How much is the non-controlling interest in net assets on December 31, 2020?
a. P763,455
b. P871,005
c. P731,505
d. P745,455
18. What is the amount of consolidated shareholder's equity?
a. P9,853,575
b. P9,122,070
c. P8,773,575
d. P9,867,525
19. On January 5, 2020, Purpose Corporation purchased 70% of Showtime Company's P10
par ordinary shares for P900,000. On this date, the carrying amount of Showtime's net
assets was P1,000,000. The fair value of identifiable net assets and liabilities of Showtime
were the same as the carrying amount except for equipment, which is P200,000 in excess
alda
of carrying amount. For the year ended December 31, 2020, Showtime had a net income
of P150,000 and paid cash dividend of P63,000 to Purpose. Excess attributable to
equipment is amortized over 10 years.
In December 31, 2020 consolidated statements, the non-controlling interest should be
reported at:
а. Р397,714
b. P380,614
c. P372,000
d. P345,500
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
