On January 1, 2020, William Corp. (qualifies as SME) paid cash of P600,000 for all the outstanding shares of Kate Company. The carrying value of the assets and liabilities of Kate on January 1, 2020 follow: Accounts Receivable P90,000 Inventory 180,000 Plant & Equipment (net of Accumulated Depreciation of P220,000) 320,000 Goodwill 100,000 Liabilities 120,000 On January 1, 2020 Kate inventory had a fair value of P150,000 and plant & equipment (net) had a fair value of P380,000. Cost of arranging the combination are as follows: legal fees for combination, P30,000; finder’s fee, P50,000; other miscellaneous direct costs, P20,000. Net income of William and Kate for 2020 amounts to P158,000 and P60,000, respectively. William received dividend of P18,000 from Kate during 2020. The PPE has original useful life of 10 years and was already held for 4 years as of date of acquisition. On December 31, 2020, what is the consolidated net income? 220,000 200,000 210,000 202,000

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 14RE

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On January 1, 2020, William Corp. (qualifies as SME) paid cash of P600,000 for all the outstanding shares of Kate Company. The carrying value of the assets and liabilities of Kate on January 1, 2020 follow:
Accounts Receivable                                                     P90,000
Inventory                                                                      180,000
Plant & Equipment (net of Accumulated
            Depreciation of P220,000)                                 320,000
Goodwill                                                                      100,000
Liabilities                                                                     120,000

On January 1, 2020 Kate inventory had a fair value of P150,000 and plant & equipment (net) had a fair value of P380,000. Cost of arranging the combination are as follows: legal fees for combination, P30,000; finder’s fee, P50,000; other miscellaneous direct costs, P20,000.

Net income of William and Kate for 2020 amounts to P158,000 and P60,000, respectively. William received dividend of P18,000 from Kate during 2020. The PPE has original useful life of 10 years and was already held for 4 years as of date of acquisition.

On December 31, 2020, what is the consolidated net income?

220,000

200,000

210,000

202,000

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