On January 1, 2021, ABC purchased 90% of the outstanding shares of PQR by paying P740,000. On that date, PQR had P300,000 capital stock and P500,000 of retained earnings. An undervalued asset attributable to building amounting to P60,000 witha remaining life of 10 years. All other assets and liabilities of PQR had book value approximated their fair market value. On January 1, 2022, ABC's common stock and retained earnings amounted to P1,000,000 and P850,000 respectively, while PQR's retained earnings is P600,000. The 2022 net income and dividends was as follows: ABC Net Income P340,000 and Dividend of P100,000; PQR net income P150,000 and Dividends P50,000. On April 1, 2022, ABC sold machinery with a book value of P30,000 to PQR for P60,000. The machinery is expected to have a remaining useful life of five years from the date of the sale. On December 1, 2022, PQR company sold equipment with a book value at P72,000 to ABC for P60,000. The equipment is expected to last for ten years from the date of sale. Compute for the parent's portion of consolidated retained earnings on December 31, 2022.
On January 1, 2021, ABC purchased 90% of the outstanding shares of PQR by paying P740,000. On that date, PQR had P300,000 capital stock and P500,000 of retained earnings. An undervalued asset attributable to building amounting to P60,000 witha remaining life of 10 years. All other assets and liabilities of PQR had book value approximated their fair market value. On January 1, 2022, ABC's common stock and retained earnings amounted to P1,000,000 and P850,000 respectively, while PQR's retained earnings is P600,000. The 2022 net income and dividends was as follows: ABC Net Income P340,000 and Dividend of P100,000; PQR net income P150,000 and Dividends P50,000. On April 1, 2022, ABC sold machinery with a book value of P30,000 to PQR for P60,000. The machinery is expected to have a remaining useful life of five years from the date of the sale. On December 1, 2022, PQR company sold equipment with a book value at P72,000 to ABC for P60,000. The equipment is expected to last for ten years from the date of sale. Compute for the parent's portion of consolidated retained earnings on December 31, 2022.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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Transcribed Image Text:On January 1, 2021, ABC purchased 90% of the outstanding shares of PQR by
paying P740,000. On that date, PQR had P300,000 capital stock and P500,000
of retained earnings. An undervalued asset attributable to building amounting to
P60,000 with a remaining life of 10 years. All other assets and liabilities of PQR
had book value approximated their fair market value. On January 1, 2022, ABC's
common stock and retained earnings amounted to P1,000,000 and P850,000
respectively, while PQR's retained earnings is P600,000. The 2022 net income
and dividends was as follows: ABC Net Income P340,000 and Dividend of
P100,000; PQR net income P150,000 and Dividends P50,000. On April 1, 2022,
ABC sold machinery with a book value of P30,000 to PQR for P60,000. The
machinery is expected to have a remaining useful life of five years from the date
of the sale. On December 1, 2022, PQR company sold equipment with a book
value at P72,000 to ABC for P60,000. The equipment is expected to last for ten
years from the date of sale. Compute for the parent's portion of consolidated
retained earnings on December 31, 2022.
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