Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow: INCOME AND RETAINED EARNINGS Parent Company Company 800,000 Subsidiary 550,000 Sales Dividend income Cost of sales 40,000 Operating expenses Net income Retained eamings, Jan 1, 2019 Dividends declared Retained eamings end (480,000) (250,000) (150,000) 150,000 100,000 (50,000) _ 200,000 (60,000) 300,000 500,000 (100,000) 700,000 BALANCE SHEET Cash 300,000 125,000 30,000 45,000 Receivables Inventory Investmentin Subsidiary PPE 100,000 650,000 350,000 900,000 350.000. Total 2,300,000 550,000 Liabilities Outstanding shares Retainedeamings 600,000 150,000 200,000 200.000. 1,000,000 700.000 Total 2,300,000 550,000 AdditionalInfomation: 1. 2. The undervalued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-years. Subsidiary Company owes Parent Company P5,000 on December 31, 2x19.

SWFT Comprehensive Vol 2020
43rd Edition
ISBN:9780357391723
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Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 38P
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How much is the consolidated profit attributable to parent on December 31, 2x19?

On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. The
financial statements of Parent and Subsidiary Company before the acquisition follow:
Subsidiary Parent
Company Company Value
100,000
50,000
Parent
Cash
700,000
100,000
55,000
Inventory
300,000
1,000,000
500,000
1,000,000
500,000
365,000
200,000
PPE
350,000
200,000
200,000
100,000
Liabilities
Outstanding Shares
Retained eamings
Transcribed Image Text:On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow: Subsidiary Parent Company Company Value 100,000 50,000 Parent Cash 700,000 100,000 55,000 Inventory 300,000 1,000,000 500,000 1,000,000 500,000 365,000 200,000 PPE 350,000 200,000 200,000 100,000 Liabilities Outstanding Shares Retained eamings
Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow:
INCOME AND RETAINED EARNINGS
Parent
Subsidiary
Company Company
800,000
40,000
(480,000) (250,000)
(60.000)
300,000
500,000
(100,000)
Sales
550,000
Dividend income
Cost of sales
Operating expenses
Net income
Retained eamings, Jan 1, 2019
Dividends declared
(150.000)
150,000
100,000
(50.000)
Retained eamings end
700,000
200,000
BALANCE SHEET
Cash
300,000
125,000
Receivables
100,000
650,000
350,000
900.000
30,000
45,000
Inventory
Investmentin Subsidiary
PPE
350,000
Total
2,300,000
550,000
600,000
1,000,000
Liabilities
150,000
200,000
Outstandingshares
Retainedeamings
700.000
200.000
Total
2,300,000
550,000
AdditionalInfomation:
1.
The undervalued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-years.
Subsidiary Company owes Parent Company P5,000 on December 31, 2x19.
Transcribed Image Text:Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow: INCOME AND RETAINED EARNINGS Parent Subsidiary Company Company 800,000 40,000 (480,000) (250,000) (60.000) 300,000 500,000 (100,000) Sales 550,000 Dividend income Cost of sales Operating expenses Net income Retained eamings, Jan 1, 2019 Dividends declared (150.000) 150,000 100,000 (50.000) Retained eamings end 700,000 200,000 BALANCE SHEET Cash 300,000 125,000 Receivables 100,000 650,000 350,000 900.000 30,000 45,000 Inventory Investmentin Subsidiary PPE 350,000 Total 2,300,000 550,000 600,000 1,000,000 Liabilities 150,000 200,000 Outstandingshares Retainedeamings 700.000 200.000 Total 2,300,000 550,000 AdditionalInfomation: 1. The undervalued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-years. Subsidiary Company owes Parent Company P5,000 on December 31, 2x19.
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