On January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 par common stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1, were as follows: REQUIREMENTS: USING THE ADDITIONAL INFORMATION WHAT IS THE AMOUNT OF THE:a. The investment balance on December 31b. Dividend Income for the yearc. Non-controlling interest in net income on December 31 SubsidiaryCompanyP 37,4009,10016,10040,00010,000P 112,600AssetsParentCompanyP 30,90034,20022,900179,000CashAccounts receivable, netInventoriesEquipment, netPatentsP 267,000Total AssetsLiabilities and EquitiesP 6,600P 4,000100,000100,00015,00048.000P 267,000Accounts PayableBonds PayableCommon stock, P10 par50,000Share Premium15,00041.000P 112,600Retained earningsTotal Liabilities and EquitiesAt the date of acquisition, all assets and liabilities of Subsidiary Company have book value approximately equal totheir respective market values except the following as determined by appraisal as follows:Inventories (FIFO method)Equipment (net-remaining life 4 years)Patents (remaining life 10 years)P17,10048,00013,000ADDITIONAL INFORMATION:For the year ended December 31, the following results were given:Parent CompanySubsidiary CompanyDividend PaidP15,0004,000Net IncomeP30,2009,400

The parent company acquired 90% of the net assets of the subsidiary company making the parent…

Answered: On January 1, Parent Company acquired…

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

Chapter12: Intangibles

Section: Chapter Questions

Problem 9MC

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On January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 par common stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1, were as follows:

REQUIREMENTS:

USING THE ADDITIONAL INFORMATION WHAT IS THE AMOUNT OF THE:

a. The investment balance on December 31

b. Dividend Income for the year

c. Non-controlling interest in net income on December 31

Subsidiary
Company
P 37,400
9,100
16,100
40,000
10,000
P 112,600
Assets
Parent
Company
P 30,900
34,200
22,900
179,000
Cash
Accounts receivable, net
Inventories
Equipment, net
Patents
P 267,000
Total Assets
Liabilities and Equities
P 6,600
P 4,000
100,000
100,000
15,000
48.000
P 267,000
Accounts Payable
Bonds Payable
Common stock, P10 par
50,000
Share Premium
15,000
41.000
P 112,600
Retained earnings
Total Liabilities and Equities
At the date of acquisition, all assets and liabilities of Subsidiary Company have book value approximately equal to
their respective market values except the following as determined by appraisal as follows:
Inventories (FIFO method)
Equipment (net-remaining life 4 years)
Patents (remaining life 10 years)
P17,100
48,000
13,000
ADDITIONAL INFORMATION:
For the year ended December 31, the following results were given:
Parent Company
Subsidiary Company
Dividend Paid
P15,000
4,000
Net Income
P30,200
9,400

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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