On January 1, ABC Acquired 60 percent of the outstandingvoting stock of XYZ for P301,500 cash consideration. Theremaining 40 percent of XYZ had an acquisition date fairvalue of P138,500. On January 1, XYZ possessed equipment(5-year life) that was undervalued on its books P25,000.XYZ also had developed several secret formulas that ABCassessed at P50,000. Theses formulas, although notrecorded on XYZ's financial records, were estimated tohave a 20-year future life. ABC also determined that theinventory of XYZ is overvalued by P10,000. 80% of theseinventories remain unsold by the end of the year. As ofDecember 31, the financial statements appeared as follows:АВСXYZP (300, 000)P (200, 000)Revenues (from sales anddividends)Cost of goods soldExpenses140, 00020, 000P (140, 000)80, 00010, 000P (110, 000)Net IncomeRetained eamings 1/1Net IncomeDividends paidRetained eamings 12/31P (300, 000)(140, 000)-0-P (150, 000)(110, 000)10,000 ||P (250, 000)P (440, 000)P 210, 000150, 000301,500398,500P 1,060, 000Р90, 000110, 000Cash and ReceivablesInventoryInvestment in SSEquipment (net)Total Assets-0-300, 000P500, 000P (420, 000)(200, 000)(440, 000)P (1,060,000)P (150, 000)(100, 000)(250, 000)P (500, 000)LiabilitiesCommon stockRetained earmings 12/31Total Liabilities and EquitiesDetermine the consolidated expenses to be reportedfor the year.Your answer

Consolidated expenses are those expenses which has been incurred by the company which has been…

Answered: Determine the consolidated expenses to…

Business

Accounting

Determine the consolidated expenses to be reported for the year.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

On January 1, ABC Acquired 60 percent of the outstanding
voting stock of XYZ for P301,500 cash consideration. The
remaining 40 percent of XYZ had an acquisition date fair
value of P138,500. On January 1, XYZ possessed equipment
(5-year life) that was undervalued on its books P25,000.
XYZ also had developed several secret formulas that ABC
assessed at P50,000. Theses formulas, although not
recorded on XYZ's financial records, were estimated to
have a 20-year future life. ABC also determined that the
inventory of XYZ is overvalued by P10,000. 80% of these
inventories remain unsold by the end of the year. As of
December 31, the financial statements appeared as follows:
АВС
XYZ
P (300, 000)
P (200, 000)
Revenues (from sales and
dividends)
Cost of goods sold
Expenses
140, 000
20, 000
P (140, 000)
80, 000
10, 000
P (110, 000)
Net Income
Retained eamings 1/1
Net Income
Dividends paid
Retained eamings 12/31
P (300, 000)
(140, 000)
-0-
P (150, 000)
(110, 000)
10,000 ||
P (250, 000)
P (440, 000)
P 210, 000
150, 000
301,500
398,500
P 1,060, 000
Р90, 000
110, 000
Cash and Receivables
Inventory
Investment in SS
Equipment (net)
Total Assets
-0-
300, 000
P500, 000
P (420, 000)
(200, 000)
(440, 000)
P (1,060,000)
P (150, 000)
(100, 000)
(250, 000)
P (500, 000)
Liabilities
Common stock
Retained earmings 12/31
Total Liabilities and Equities
Determine the consolidated expenses to be reported
for the year.
Your answer

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